Does increased international competition increase the need for training?

Abstract

Both politicians and parties in the labour market have in recent years stressed the importance of work-related training. Globalization, an increased international competition, is often said to be one important factor determining the need for more work-related training. The relationship between increased international competition and more training has almost become a stylized fact. However, we argue that this relationship is not empirically well enough founded. Therefore, in this note we test this relationship by answering the following question: Is it true that firms operating in an international competitive arena invest more in training for their workers compared to firms not operating in an international competitive arena? Evidence from representative firm-level data suggests that the answer is yes. Manufacturing firms operating in an international competitive arena do invest more in training for their workers compared to firms not operating in an international competitive arena. A natural interpretation of this result is that these firms respond to demands from fierce international competition by skilling their workforce through training at work.

Acknowledgements

Many thanks to Hege Torp and seminar participants at Institute for social research for valuable comments to an earlier draft. Financial support from The Research Council of Norway (project number 156035/50) is gratefully acknowledged.

Notes

¹ The total effect is the sum of: −0.04 − 0.009 + 0.511 = 0.462. Measured in percent this equals: (exp(0.462) − 1) * 100 = 59%.