Education, On-the-Job Training, and Innovation in Transition Economies

Abstract

The aim of this paper is to establish the effect of on-the-job training and university education on innovation decisions made by firms in transition economies of Eastern Europe and the former Soviet Union. The authors use the 2002 and 2005 waves of the Business Environment and Enterprise Performance Survey (BEEPS). Based on a mixed discrete-continuous model with endogenous variables in the firm-innovation equation, their findings suggest that further investments in education will not lead to necessary improvements in firms' demonstrated ability to innovate. This is in contrast to on-the-job training, which the authors find increases a firm's ability to innovate in countries with transition economies.