Publication Date

July 1996


[Excerpt] One of the central propositions of the human capital theory of on-the-job training is that workers pay all the costs and receive all the benefits of general training (see Ehrenberg and Smith 1996, Filer, Hammermesh and Rees 1996, Borjas 1996, Kaufman 1986). Since general training raises a worker's ability to be productive in other organizations as well as the one providing the training, the training firm must pay a wage commensurate with the trained worker's new higher level of productivity if they are to prevent the loss of their trained workers. Since the workers, not the firm, get the benefits of the training, "firms [will] provide general training only if they [do] not have to pay any of the costs" (Becker 1962 p. 13). Since the training is of value to prospective trainees, equilibrium in the training market requires that "employees pay for general on-the-job training by receiving wages below what could be received elsewhere" (Becker 1962 p. 13) in a job offering no training. Is this correct? Do "Workers pay all the costs" of training in skills that are technically general (i.e. useful at other firms)--WPAC for short? Do "workers receive all the benefits" of general training ("WRAB" for short)?


Suggested Citation
Bishop, J. H. & Kang, S. (1996). Do some employers share the costs and benefits of general training? (CAHRS Working Paper #96-19). Ithaca, NY: Cornell University, School of Industrial and Labor Relations, Center for Advanced Human Resource Studies.