Firm Training and Labour Demand in Belgium :Does Productivity Dominate Cost Effects ?

This paper models and estimates the impact of quantitative and qualitative training financed by the firm on labour demand in Belgium. It assumes profit maximising firms producing under short run monopolistic competition conditions, where training can increase labour demand through its positive net effect on labour productivity or decrease it through higher direct labour costs and wages. The estimation of our model on a panel of 17,812 firms over the period 1999- 2007 allowing to control for the potential simultaneity between training and labour demand and for time-invariant workplace characteristics reveals a small positive impact of training variables on labour demand. This suggests that productivity effects could dominate cost effects to a small extent.