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Human Capital Investment and Development: The Role of On-the-Job Training

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  • Xiao Ma
  • Alejandro Nakab
  • Daniela Vidart

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 cross-country income differences.

Suggested Citation

  • Xiao Ma & Alejandro Nakab & Daniela Vidart, 2024. "Human Capital Investment and Development: The Role of On-the-Job Training," Journal of Political Economy Macroeconomics, University of Chicago Press, vol. 2(1), pages 107-148.
    • Handle: RePEc:ucp:jpemac:doi:10.1086/728667
    DOI: 10.1086/728667
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