The Moderating Role of Capital Intensity in the Nexus of Formal Training and Labor Productivity: The Case of Vietnam's Enterprises

Abstract

Recent statistics have shown that the quality of Vietnamese labor was below that of many countries and not improving for faster economic growth. The research question is whether formal training for the workforce can enhance their skills, leading to a higher output rate. This study explores the impact of formal training on labor productivity in Vietnam’s enterprises. The regression analysis results of a World Bank Enterprise Survey in 2023 show that for firms with a high level of capital intensity, investments in formal training have a positive effect on labor productivity. Formal training programs for production workers are not significant in the productivity model, but when firms purchase and use substantial physical capital, investments in human capital through training return positive sales per worker. The results suggest that investment in human capital should not be decoupled from investment in physical capital to gain productivity.