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The return to firm investment in human capital

Almeida, R.; Carneiro, P.; (2005) The return to firm investment in human capital. (cemmap Working Papers CWP21/). Institute for Fiscal Studies: London, UK. Green open access

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Abstract

In this paper we estimate the rate of return to firm investments in human capital in the form of formal job training. We use a panel of large firms with unusually detailed information on the duration of training, the direct costs of training, and several firm characteristics such as their output, workforce characteristics and capital stock. Our estimates of the return to training vary substantially across firms. On average it is -7% for firms not providing training and 24% for those providing training. Formal job training is a good investment for many firms and the economy, possibly yielding higher returns than either investments in physical capital or investments in schooling. In spite of this, observed amounts of formal training are very small.

Type: Working / discussion paper
Title: The return to firm investment in human capital
Open access status: An open access version is available from UCL Discovery
Publisher version: http://www.cemmap.ac.uk/publications.php
Language: English
Keywords: JEL classification: C23, D24, J31. On-the-job training, panel data, production function, rate of return
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/14681
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