A Program of Research on the Role of Employer Training in Ameliorating Skill Shortages and Enhancing Productivity and Competitiveness. EQW Working Papers WP07.

A study examined the role of employer training in ameliorating skill shortages and enhancing productivity and competitiveness. The study established that formal training by specialized personnel accounts for only 5-10% of the time newly hired workers are engaged in training activities and that existing labor market research instruments fail to measure much of the informal training and on-the-job training (OJT) received by new employees. U.S. employers were found to devote less time and fewer resources to training entry-level blue-collar, clerical, and service employees than do employers in Germany and Japan. The lower U.S. training rate was attributed to the following: higher employee turnover and higher cost of capital in the United States, lower trainability of U.S. youth, lower rates of technological progress, and lack of information about the quality of the general human capital obtained from OJT. Clear evidence that most U.S. employers and workers underinvest in OJT was found. The study further confirmed that, although high-quality occupational training offered by schools ameliorates the problem of underprovision of skill training, school-based training cannot replace some kinds of employer training and is generally less effective than employer-provided training in providing the same skills. (Contains 126 references.) (MN)