On-The-Job Training

On-The-Job Training

On-The-Job Training

On-The-Job Training

Excerpt

In 1964, Gary Becker noted the important role of on-the-job training in Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education by observing that:

Theories of firm behavior, no matter how they differ in other
respects, almost invariably ignore the effect of the productive pro
cess itself on worker productivity. This is not to say that no one
recognizes that productivity is affected by the job itself; but the
recognition has not been formalized, incorporated into economic
analysis, and its implications worked out…. Many workers
increase their productivity by learning new skills and perfecting
old ones while on the job. Presumably, future productivity can be
improved only at a cost, for otherwise there would be an unlimited
demand for training (1964, p. 8).

In the decades following Becker's classic text, researchers have made substantial progress in achieving Becker's goal of fully incorporating the role of on-the-job training into economic analysis.

Researchers now widely accept that there are two key aspects of training. First, there is the recognition that on-the-job training is an important example of an [investment] in human capital. Like any investment, there are initial costs. For on-the-job training, these costs include the time devoted by the worker and co-workers to learning skills that increase productivity plus the costs of any equipment and material required to teach these skills. Like any investment, the returns to these expenditures occur in future periods. For on-the-job training, these future returns are measured by the increased productivity of the worker during subsequent periods of employment.

The second key aspect of on-the-job training is the distinction between [general] and [specific] on-the-job training, a distinction emphasized by Becker in his early works. While all training increases . . .

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