There is a vast empirical literature of the effects of training on wages that are taken as an indirect measure of productivity. This paper is part of a smaller literature on the effects of training on direct measures of industrial productivity. We analyse a panel of British industries between 1983 and 1996. Training information (and other individual productivity indicators such as education and...

ing from detail, it is instructive to consider what would happen in a perfectly flexible economy, if schooling actually displayed stagnant productivity while all other sectors faced a constant positive rate of productivity growth. The outcome would be what Baumol (1967) has called the cost disease of services. With a functioning labour market, the wages of workers in the stagnantproductivity se...