Training, productivity and wages in Italy Gabriella Conti * Department of Economics and Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester CO43SQ, United Kingdom Abstract This paper presents for the first time panel evidence on the productivity and wage effects of training in Italy. It is based on an original dataset which has been created aggregating individual-level data on training with firm-level data on productivity and wages into an industry panel covering all sectors of the Italian economy for the years 1996–1999. I use several modelling specifications and a variety of panel data techniques to argue that training significantly boosts productivity. However, no such effect is uncovered for wages. This seems to suggest that firms do actually reap more of the returns. D 2005 Elsevier B.V. All rights reserved. JEL classification: C23; J24; J31 Keywords: Training; Productivity; Wages 1. Introduction Between 1995 and 2002, the annual growth rate of hourly labour productivity in manufacturing has been 4.5% in the US, 4.6% in France, 2.4% in Germany and only 0.9% in Italy (OECD, 2002). The Governor of the Bank of Italy, Antonio Fazio, in his bFinal ConsiderationsQ of this year’s Report to the annual General Meeting, has urged immediate policy responses to stop the loss of competitiveness suffered by the Italian system. One of the key factors behind such a bproductivity gapQ has long been recognized in the lack of ability of the Italian labour force to adapt to the everchanging needs of the global market. 0927-5371/$ - see front matter D 2005 Elsevier B.V. All rights reserved. doi:10.1016/j.labeco.2005.05.007 * Tel.: +44 1206 874875. E-mail address: gconti@essex.ac.uk. Labour Economics 12 (2005) 557 – 576 www.elsevier.com/locate/econbase