Job-Related Training and Benefits for Individuals

This paper reviews the literature on job-related training and the effects of these investments for differentgroups of individuals. The paper also elaborates on the theories, empirical explanations, and policyimplications that can be drawn from these findings. Employer-provided training is by far the mostimportant source of further education and training after an individual enters the labour market. Asubstantial portion of these human capital investments are financed by firms and it appears that thecontribution by individuals are in most circumstances relatively modest. At the same time, substantialgains for individuals participating in training are documented in a large number of studies. The benefits arenot only confined to wage returns as research has also shown that training leads to increased internalemployability and job-security and external labour market effects such as higher labour participation rates,lower unemployment, and shorter unemployment periods.Training is not equally distributed among employees. Older, low skilled workers, and to some extentfemale workers typically receive less training than other groups of employees. However, we do not findany clear-cut evidence that returns to training varies with gender, educational or skills levels, whichsuggests that inequalities do not arise because of differences in returns to training, but are more aconsequence of inequalities of the distribution of training investments.The findings of this review further suggest that the returns to training are higher in the case that it isfinanced by the employer and that the returns to training are substantially higher for those leaving for anew employer. Employer-financed training appears, however, to lower the probability of an individualleaving for a new job elsewhere. The analysis of the distribution of returns to training reveals that althoughindividuals benefit from these investments, the employer reaps most of the returns to training whichsuggests that the productivity effects are substantially larger than wage effects.