Does Training Favour Employment in Belgium ?

The objective of this paper is to model and estimate the impact of training financed firms on labour demand in Belgium, introducing training potential productivity and cost effects. We emphasise that training variables, both qualitative and quantitative, can either increase labour demand through their positive effect on labour physical productivity and they can decrease labour demand through direct labour costs and wages. Generalised method of moments (GMM) estimations on a panel of 269 firms observed during the period 1998-2004 show non significant impacts of training variables on labour demand, the productivity and cost effects seeming to offset each other. These results allow us to suggest two scenarios in terms of firms' and workers' behaviour and that subsidiary training could favour employment under the two assumptions that firms don't transform training in an increased productivity-wage mark-up but convert additional productivity into employment, and workers don't claim for higher wages as a result of additional productivity.