# **Figure 1: Effects of OJT on Productivity and Wage Gains**

<!-- Start of picture text --> 6.00<br>5.00 3.2 Note: In the case of Belgium, firm productivity gain ranges<br>4.00 from 1.7 to 3.2 percent in response to an increase of 10<br>3.00 1.7 percentage points in the fraction of workers who receive<br>1.7<br>2.00 1.0 training. The average wage increases by only 1 to 1.7 percent<br>1.00 in response to the same independent variable.<br>0.00<br>Productivity Gains Wage Gains Source: Konings and Vanormelingen, 2015.<br>6.00 Note: In the United Kingdom, a 1 percent increase in work-<br>5.00<br>4.00 related training is associated with an increase in value-added<br>3.00 per hour of about 0.6 percent for the firm, as well as an<br>2.00<br>1.00 0.60 0.30 increase in hourly wages of about 0.3 percent for the worker.<br>0.00<br>Source: Dearden, Reed, and Van Reenen, 2006.<br>Productivity Gains Wage Gains<br>%<br>Size of the effect in<br>in %<br>Size of the effect<br><!-- End of picture text -->

# **Box 4: What Type of Workers Receive Training?**

<mark>Training is not equally distributed among employees. Indeed, certain types of workers usually receive more training than others. More education and a higher threshold of skills from before begets more training. In this regard, various studies (Barron, Black and Loewenstein 1989; Hansson 2009; Leuven and Oosterbeek 2004; and Lillard and Tan 1992) show that less-educated and older workers receive less training, and that worker tenure increases the likelihood of training for the same job. Almeida and Carneiro (2009) consistently show that the workforce in firms that provide training is more educated than the workforce in firms that do not. The proportion of workers with a Bachelor’s or other college degree(s) is 6 percent and 3 percent in high and low training firms, respectively, versus 1.3 percent in non-training firms. Balsvik (2011) also finds that firms that provide training to their workers tend to have a workforce with more years</mark> of formal schooling.

<mark>Training incidence is also lower among female workers. Blundell, Dearden and Meghir (1996) find that men have a much higher probability than women of undertaking employer-provided training and workrelated training leading to a formal vocational qualification. Evertsson (2004) finds that women are significantly less likely to take part in formal OJT than men based on a Swedish pooled cross-sectional data set. Her research concludes that among those who receive training, women are more likely to participate in</mark> industry-specific training, while men participate in general training for lifelong skills.

<mark>There is no conclusive evidence that returns to training on productivity vary significantly with worker characteristics such as gender, educational or skill levels. Wage premiums to those participating in training while working for an employer are relatively homogeneous across age and educational attainment. However, some factors might be influencing employers to have an unequal distribution of training investments for these groups: discrimination, higher worker turnover for specific groups, prior skill levels, distortionary public policy, selection into job characteristics in the firm or possibly other factors (Evertsson</mark> 2004; Hansson 2009; Leuven and Oosterbeek 2004; Lynch 1991; Melero 2004; and Veum 1995).

<mark>The impact of training on different groups can manifest differently: in the case of relatively young and/or higher-educated workers, training provides transferable skills and increases mobility. For older and lower-</mark> 13