Foundations and Trends® in Microeconomics > Vol 2 > Issue 5

On-the-Job-Training

Harley Frazis, Bureau of Labor Statistics, Frazis.Harley@bls.gov Mark A. Loewenstein, Bureau of Labor Statistics, Loewenstein.Mark@bls.gov
 
Suggested Citation
Harley Frazis and Mark A. Loewenstein (2007), "On-the-Job-Training", Foundations and TrendsĀ® in Microeconomics: Vol. 2: No. 5, pp 363-440. http://dx.doi.org/10.1561/0700000008

Published: 16 Feb 2007
© 2006 H. Frazis and M. A. Loewenstein
 
Subjects
Labor Economics
 
Keywords
On-the-job trainingHuman capitalProductivity
 

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In this article:
1 Introduction
2 Measuring Training
3 The Division of the Cost and Return to Training
4 The Choice of Training
5 Matching of High Ability, Low Turnover Workers to High Training Jobs
6 Estimating the Effect of Training on Wages, Productivity, and Turnover
7 Conclusion
References

Abstract

The analysis of how individuals obtain and are paid for their skills is fundamental to labor economics. The basic idea of human capital theory is that workers and firms invest in workers' skills in order to increase their productivity, much as persons invest in financial or physical assets to earn income. Workers develop many skills through formal education not tied to an employer, but an important part of their skills are learned on the job. This paper is a survey of the recent literature on on-the-job training, both theoretical and empirical.

DOI:10.1561/0700000008
ISBN: 978-1-60198-002-1
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ISBN: 978-1-60198-003-8
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Table of contents:
Introduction
Measuring Training
The Division of the Cost and Return to Training
The Choice of Training
Estimating the Effect of Training on Wages, Productivity and Turnover
Conclusions
Reference

On-the-Job-Training

On-the-Job Training surveys the recent literature from both a theoretical and empirical perspective. The analysis of how individuals obtain and are paid for their skills is fundamental to labor economics. The basic idea of human capital theory is that workers and firms invest in workers' skills in order to increase their productivity, much as persons invest in financial or physical assets to earn income. Workers develop many skills through formal education not tied to an employer, but an important part of their skills are learned on the job. On-the-Job Training focuses on recent literature including empirical research using direct measures of training and theoretical papers inspired by findings from this empirical work. The authors presents a theoretical model showing that costs and returns to general human capital may be shared if training increases mobility costs, if there are constraints on lowering wages, or if there is uncertainty about the value of training at competing employers. This model analyzes the choice of the amount of training, emphasizing the influence of whether the employer can commit to training prior to employment. In addition, the model implies that firms will attempt to match low-turnover workers with training opportunities, which is supported by the empirical literature.

 
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