The impact of training on productivity and wages in Tunisia

Abstract

PurposeThe purpose of this paper is to investigate the impact of training on labor productivity and wages in order to examine how the benefits from training are shared between employers and employees.Design/methodology/approachThis study analyzes an industry panel covering all sectors of the Tunisian economy for the period 2000–2014. The panel structure of the data allows controlling for the endogeneity of training by using different panel data techniques.FindingsResults show that both employers and workers benefit from training since it has a positive and significant effect on productivity and wages. However, the effect of training on productivity is substantially higher than on wages, suggesting that employers obtain the largest part of the returns to training. This result is consistent with theories that explain firm-sponsored training by a compressed wage structure in imperfect labor markets.Originality/valueThis study, particularly showcasing the labor market in Tunisia, is one of the first to provide estimates for a developing country to assess the effects of training for both employer and employee. It is also among the few empirical works that analyzed the impact of training on labor productivity and wages simultaneously.