Human Capital Investment and Development: The Role of Onthe- Job Training
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Universidad Torcuato Di Tella
Peking University
University of Connecticut
Peking University
University of Connecticut
Abstract
Workers in richer countries experience faster rates of wage growth over their lifetimes than
workers in poorer countries. We offer an explanation for this pattern by showing that
workers in richer economies receive more firm-provided training. Using cross-country
enterprise and worker-level data, we document that the share of workers who receive
firm-provided training increases with development, and that firm-provided training is a
key determinant of workers’ human capital. We then build a general equilibrium search
model with firm-provided training investments. Our model suggests that firm-provided
training accounts for 38% of cross-country wage growth differences and 12% of crosscountry
income differences.
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Keywords
On-the-Job Training, Human Capital Accumulation, Lifecycle Wage Growth