This paper investigates the determinants of human capital investment in the form of formal training and estimates effects of this investment on productivity using Propensity Score Matching (PSM) method. We use data from a survey of small and medium enterprises (SMEs) in Vietnam (completed in 2010) with detailed information about training and several firm characteristics. | JED January 2013 | 61 Investment in Human Capital and Labor Productivity in Southern Key Economic Zone An Application of Propensity Score Matching Method NGUYỄN KHÁNH DUY Master of Arts, University of Economics HCMC khanhduy@ NGUYỄN THỊ HOÀNG OANH Master of Arts, University of Economics HCMC NGUYỄN DUY TÂM Institute of Development Economics Research, UEH PHẠM TIẾN THÀNH Master of Arts, Vietnam-Netherlands Program, UEH TRƯƠNG THANH VŨ Master of Arts, Researcher at Development Strategy Institute, MPI ABSTRACT This paper investigates the determinants of human capital investment in the form of formal training (off-the-job training) and estimates effects of this investment on productivity using Propensity Score Matching (PSM) method. We use data from a survey of small and medium enterprises (SMEs) in Vietnam (completed in 2010) with detailed information about training and several firm characteristics. Our estimates reveal that investment in human capital currently does not have the considerable contribution to the improvement in productivity of SMEs. This result does not support the universalistic perspective in strategic human resource management (SHRM) theoretical model. Keywords: evaluation, training, matching, PSM, SMEs, Vietnam, productivity, investment in human capital 62 | Nguyễn Khánh Duy Investment in Human Capital 1. INTRODUCTION In recent years, good progress has been found in many industries where knowledge and well-trained workers are the key factor. The accumulation of human capital plays an important role in explaining economic performance and long-term growth (Lucas, 1988). This paper conveys the importance of training in organizations as a basis for increased productivity. Training is widely understood as communication directed at a defined population for the purpose of developing skills, modifying behavior, and increasing competence. Generally, training focuses exclusively on what needs to be known. Although in organizations .
