On-the-Job Training : Returns, Barriers to Provision, and Policy Implications
Firms that provide on-the-job training do so when it is critical to their productivity—and when productivity is critical to their survival. This paper begins by confirming a significant and positive return from on-the-job training on wages and prod...
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/215081496860711954/On-the-job-training-returns-barriers-to-provision-and-policy-implications http://hdl.handle.net/10986/27290 |
| Summary: | Firms that provide on-the-job training
do so when it is critical to their productivity—and when
productivity is critical to their survival. This paper
begins by confirming a significant and positive return from
on-the-job training on wages and productivity, as well as
the presence of positive externalities from on-the-job
training, while discussing the methodological considerations
at play. The paper then reviews and validates the presence
of market failures such as information asymmetries within
the firm as a result of low-quality management practices
that dampen firm demand for on-the-job training. Lack of
competition in the firm's external environment appears
to undermine adoption of on-the-job training and other
complementary productivity-enhancing activities within the
firm. The literature suggests that for most firms, a
comprehensive policy approach that resolves external
constraints to becoming more productive is likely to have a
positive impact on the provision of on-the-job training and
adoption of complementary policies. More direct forms of
firm-level support to improve management capabilities could
also alleviate under-provision of on-the-job training. Where
societies have improved welfare as a goal, public policy
measures would be needed to complement on-the-job training
for some specific groups of workers (older, less educated,
women). In essence, the paper highlights the importance of
demand-side constraints for firms, rather than supply-side
constraints, for the provision of on-the-job training. |
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