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Small Firms, Human Capital, and Productivity in Asia

Author

Listed:
  • Vandenberg, Paul

    (Asian Development Bank Institute)

  • Trinh, Long Q.

    (Asian Development Bank Institute)

Abstract

The paper analyzes the link between human capital and firm-level productivity in five Asian countries. It draws on a dataset of over 4,000 enterprises and considers both the prior educational attainment of workers and in-service training programs of enterprises. Differences between small, medium-sized, and large enterprises and between countries are also presented. The key finding is that both preservice education and in-service training are positively correlated with labor productivity. The productivity of small and medium-sized enterprises (SMEs) is enhanced by a higher level of skills and education of the workforce, just as it is with large firms. However, there are country differences. The policy implications are that competitiveness is enhanced both by raising the general level of education in the workforce and by encouraging enterprise-based training programs.

Suggested Citation

  • Vandenberg, Paul & Trinh, Long Q., 2016. "Small Firms, Human Capital, and Productivity in Asia," ADBI Working Papers 582, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:0582
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    References listed on IDEAS

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    1. repec:ilo:ilowps:373751 is not listed on IDEAS
    2. Lorraine Dearden & Howard Reed & John Van Reenen, 2006. "The Impact of Training on Productivity and Wages: Evidence from British Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(4), pages 397-421, August.
    3. Julia I. Lane & John C. Haltiwanger & James Spletzer, 1999. "Productivity Differences across Employers: The Roles of Employer Size, Age, and Human Capital," American Economic Review, American Economic Association, vol. 89(2), pages 94-98, May.
    4. Black, Sandra E & Lynch, Lisa M, 1996. "Human-Capital Investments and Productivity," American Economic Review, American Economic Association, vol. 86(2), pages 263-267, May.
    5. Charoenrat, Teerawat & Harvie, Charles, 2014. "The efficiency of SMEs in Thai manufacturing: A stochastic frontier analysis," Economic Modelling, Elsevier, vol. 43(C), pages 372-393.
    6. Vandenberg, Paul., 2004. "Productivity, decent employment and poverty : conceptual and practical issues related to small enterprises," ILO Working Papers 993737513402676, International Labour Organization.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Adamu Jibir & Musa Abdu & Abdullahi Buba, 2023. "Does Human Capital Influence Labor Productivity? Evidence from Nigerian Manufacturing and Service Firms," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 805-830, June.

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    More about this item

    Keywords

    SME; human capital; firms; enterprises; services; productivity; skills; education; in-service training; labor; workforce; competitiveness; enterprise-based training; People’s Republic of China; Indonesia; Malaysia; Thailand; Viet Nam;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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