Advanced Digital Technologies and Investment in Employee Training

Abstract

By use of firm-level data that cover 25 European Union countries, the United Kingdom, and the United States as well as a difference-in-differences approach, we show that employers adopting advanced digital technologies (ADTs) reduce their investment in training per employee. Compared with the investment in training by non-adopting firms, this reduction is negligible on impact but increases to −11.3% and −13.8% of the pretreatment mean 2 and 3 years after adoption. We argue that a reason for the decline is that ADTs and employee training are substitutes in production. Our findings point to challenges in realizing high levels of firm-sponsored training for employees in increasingly digital economies.