R&D, worker training and innovation: firm-level evidence

Firms that invest in R&D and also in worker training are expected to be successful innovators; yet, the extent to which these investments are mutually reinforcing has not been established. This paper addresses that question by analysing the decision to innovate and the number of innovations introduced. Our findings, which are based on a sample of Spanish manufacturing firms, confirm that R&D is more effective when firms also invest in worker training. Moreover, for some smaller firms, investing in workers' skills (via training programs) boosts innovation even in absence of R&D. Meanwhile, on-the-job training in large firms might serve mainly to reinforce the effects of R&D. Regarding the number of innovations, our result signals that a higher absorptive capacity via higher ability of qualified workers (through schooling or training) leads to improved innovation performance.