The Effects of Investment in Education and Training on Productivity Growth in the European Union

ABSTRACT This paper examines how on‐the‐job training affects labor productivity growth, both directly and through its interaction with other intangible assets such as knowledge codified in software and databases, research and development (R&D) and intellectual property assets, organizational know‐how and branding. Using EUKLEMS & INTANProd data over 2010–2021 for 17 industries in 28 countries, we apply a difference‐in‐differences approach within an augmented production function. Results show that business investment in training significantly enhances labor productivity growth, especially in industries with higher training investment intensity, with the strongest complementarities—particularly with organizational capital—observed in business services.