Does Product Market Competition Decrease Employers' Training Investments? - Evidence from German Establishment Panel Data

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract Using a large panel data set of German manufacturing establishments, this paper investigates the impact of competition on training incidence as well as on the number of trained workers. According to theory, one would expect a negative relationship between product market competition and firms' incentives to invest in employees' general skills (Gersbach and Schmutzler 2006). In our empirical analysis, product market competition is approximated by various measures of competition such as the Herfindahl Index, the number of firms at the 3-digit industry level and the price cost margin. After controlling for unobserved heterogeneity across industries and establishments, there is no significant effect of competition on training. This result is robust towards different samples, model specifications and estimation techniques. JEL Classification: J24, L22, D43, C23 Terms of use: Documents in

Market Imperfections and Firm-Sponsored Training

“…The effect of product market competition is small and insignificant. This result is in line with the findings in Görlitz and Stiebale (2008). They studied the impact of different measures of product market competition on the firm's number of trained employees in Germany.…”

“…Bassanini and Brunello (2010) examine 15 European countries and 12 industries finding that an increase in product market deregulation generates a sizeable increase in training incidence. Görlitz and Stiebale (2008) find instead no significant effect of competition measures on training in Germany. Muehlemann and Wolter (2007) and Muehlemann (2008) find that Swiss firms are less likely to provide apprenticeship training in dense regional labor markets, where the probability that workers are to sponsor general training.…”

Is firm-sponsored training a palliative? A common agency approach

“…Autor (2001) and Bassanini and Brunello (2010), analysing firms' financing training, concluded that an increase in product competition affects positively firms' training investment. Others (Grlitz and Stiebale 2008;Picchio and Van Ours 2010) argued on the contrary that there is no competition effect on training.…”

The Development of Employers' Training Investments Over Time - A Decomposition Analysis Using German Establishment Data

“…Other theories predict a relationship between product market competition and training based on different assumptions on labor and product market imperfections and on training type (Stevens 1994, Autor 2001, Gersbach and Schmutzler 2006). Yet empirical results on the effect of product market competition on training are mixed (Bassanini et al 2007, Goerlitz andStiebale 2008).…”