Technological change and employer-provided training: Evidence from German establishments

There is a wide range of theoretical and empirical analyses suggesting that technological change has increased the demand for skills. Since training is a mechanism to upgrade workers’ skills, it would be expected that technical progress strengthens the importance of training on account of the requirement for skills to complement new technology. However, the relationship between technical progress and firms’ (employer-funded) continuous training has been little investigated. In our research we address the theoretical gap by building upon existing models from the skillbiased technological change and training literatures. This theoretical platform supports a maintained hypothesis of a positive relationship between training and technological change, which we investigate empirically for Germany using data from the IAB establishment panel. Our empirical findings indicate that in Germany a greater share of workers undergo further/continuing training in establishments subject to technological change. An important issue we raise in our empirical analysis is the possibility of endogeneity/simultaneity between training and technological change.