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Investing in formal on-the-job training: are SMEs lagging much behind?

Investing in formal on-the-job training: are SMEs lagging much behind? In a modern economy, the investment in human capital by firms is crucial to foster technological adoption and foster productivity growth. This paper analyzes the correlation between firm size and the investment in job training by employers. Using a large firm level data set across 99 developing countries, we show that a strong and positive correlation in the investment in job training and firm size is a robust statistical finding both within and across countries with very different institutions and levels of development. Even though we cannot fully disentangle correlation from causality, we show that the size-training gap is not fully explained by differences across firms in market imperfections or institutional failures impeding the development of smaller firms. Our findings call for the urgency of collecting better panel data sets to understand how cost-effective are on-the-job training programs in fostering firm productivity and growth in developing countries. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png IZA Journal of Labor & Development Springer Journals

Investing in formal on-the-job training: are SMEs lagging much behind?

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References (72)

Publisher
Springer Journals
Copyright
Copyright © 2015 by Almeida and Aterido; licensee Springer.
Subject
Economics / Management Science; Labor Economics; Population Economics
eISSN
2193-9020
DOI
10.1186/s40175-015-0029-3
Publisher site
See Article on Publisher Site

Abstract

In a modern economy, the investment in human capital by firms is crucial to foster technological adoption and foster productivity growth. This paper analyzes the correlation between firm size and the investment in job training by employers. Using a large firm level data set across 99 developing countries, we show that a strong and positive correlation in the investment in job training and firm size is a robust statistical finding both within and across countries with very different institutions and levels of development. Even though we cannot fully disentangle correlation from causality, we show that the size-training gap is not fully explained by differences across firms in market imperfections or institutional failures impeding the development of smaller firms. Our findings call for the urgency of collecting better panel data sets to understand how cost-effective are on-the-job training programs in fostering firm productivity and growth in developing countries.

Journal

IZA Journal of Labor & DevelopmentSpringer Journals

Published: Jun 12, 2015

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