High school graduates, skill formation and labour demand

By exploiting a new and rich firm-level dataset, in this paper we provide some statistical evidence on labour demand by Italian manufacturing firms, with a particular focus on the demand for high school graduates, and we empirically identify the factors underlying the decision to engage in work-based training activities, as well as its relative intensity. In so doing, we rely on a job competition mechanism of skill formation within the firm, and we stress the role that the strategic complementarity between innovation and firm organization plays in driving the generation and accumulation of new skills through training. Our results show that training propensity is positively affected by attributes like size, capital intensity, the skill composition of the labour-force, and by strategic activities like R&D, investments in new machinery and organizational change following technological change. No relevant effects seem to emerge from labour cost and internationalization activities, except for the purchase of business services from abroad. These results hold particularly for the decision to provide both formal and informal training together. Finally, R&D and techno-organizational innovations also affect the intensity of training, both in terms of training costs and in terms of the employment share of trainees.