Advanced Search
MyIDEAS: Login to save this paper or follow this series

The return to firm investments in human capital

Contents:

Author Info

  • Almeida, Rita
  • Carneiro, Pedro

Abstract

In this paper the authors estimate the rate of return to firm investments in human capital in the form of formal job training. The authors use a panel of large firms with detailed information on the duration of training, the direct costs of training, and several firm characteristics. The authors estimate of the return to training are substantial (8.6 percent) for those providing training. Results suggest that formal job training is a good investment for these firms possibly yielding comparable returns to either investments in physical capital or investments in schooling. The paper proceeds as follows. Section two describes the data the authors use. In section three, the authors present basic framework for estimating the production function and the cost function. In section fourth the authors present empirical estimates of the costs and benefits of training and compute the marginal internal rate of return for investments in training. Finally, section fifth concludes.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2008/08/08/000334955_20080808103024/Rendered/PDF/449470NWP0Box310See0WPS38511PUBLIC1.pdf
Download Restriction: no

Bibliographic Info

Paper provided by The World Bank in its series Social Protection Discussion Papers with number 44947.

as in new window
Length:
Date of creation: 01 Jun 2008
Date of revision:
Handle: RePEc:wbk:hdnspu:44947

Contact details of provider:
Postal: 1818 H Street, N.W., Washington, DC 20433
Phone: (202) 477-1234
Email:
Web page: http://www.worldbank.org/
More information through EDIRC

Related research

Keywords: ; LaborPolicies; Primary Education; Education For All; Access&Equity in Basic Education;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Macours, Karen & Vakis, Renos, 2008. "Seasonal Migration and Early Childhood Development," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) RP2008/48, World Institute for Development Economic Research (UNU-WIDER).
  2. Almeida, Rita & Carneiro, Pedro, 2008. "The return to firm investments in human capital," Social Protection Discussion Papers, The World Bank 44947, The World Bank.
  3. George S Olley & Ariel Pakes, 1992. "The Dynamics Of Productivity In The Telecommunications Equipment Industry," Working Papers, Center for Economic Studies, U.S. Census Bureau 92-2, Center for Economic Studies, U.S. Census Bureau.
  4. Acemoglu, Daron & Pischke, Jörn-Steffen, 1996. "Why do Firms Train? Theory and Evidence," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1460, C.E.P.R. Discussion Papers.
  5. Lorraine Dearden & Howard Reed & John Van Reenen, 2005. "The impact of training on productivity and wages : evidence from British panel data," Economic History Working Papers, London School of Economics and Political Science, Department of Economic History 779, London School of Economics and Political Science, Department of Economic History.
  6. Almeida, Rita & Carneiro, Pedro, 2008. "Enforcement of labor regulation and firm size," Social Protection Discussion Papers, The World Bank 43675, The World Bank.
  7. Edwin Leuven & Hessel Oosterbeek, 2002. "Evaluating the effect of tax deductions on training," Labor and Demography, EconWPA 0205001, EconWPA.
  8. Barrett , Christopher B & Carter , Michael R & Ikegami , Munenobu, 2008. "Poverty traps and social protection," Social Protection Discussion Papers, The World Bank 42752, The World Bank.
  9. Arulampalam, Wiji & Booth, Alison L. & Bryan, Mark L., 2003. "Training in Europe," IZA Discussion Papers 933, Institute for the Study of Labor (IZA).
  10. Daron Acemoglu & Jorn-Steffen Pischke, 1998. "The Structure of Wages and Investment in General Training," NBER Working Papers 6357, National Bureau of Economic Research, Inc.
  11. Zwick, Thomas, 2004. "Employee participation and productivity," Labour Economics, Elsevier, Elsevier, vol. 11(6), pages 715-740, December.
  12. Palacios, Robert & Whitehouse, Edward, 2006. "Civil-service pension schemes around the world," MPRA Paper 14796, University Library of Munich, Germany.
  13. Zvi Griliches & Jacques Mairesse, 1995. "Production Functions: The Search for Identification," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1719, Harvard - Institute of Economic Research.
  14. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, Elsevier, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
  15. Jacob Mincer, 1989. "Job Training: Costs, Returns, and Wage Profiles," NBER Working Papers 3208, National Bureau of Economic Research, Inc.
  16. Gordon Betcherman & Niels-Hugo Blunch, 2008. "The limited job prospects of displaced workers: evidence from two cities in China," Economic Change and Restructuring, Springer, Springer, vol. 41(3), pages 187-207, September.
  17. Heckman, James J & Lochner, Lance & Taber, Christopher, 1998. "Tax Policy and Human-Capital Formation," American Economic Review, American Economic Association, American Economic Association, vol. 88(2), pages 293-97, May.
  18. Sandra E. Black & Lisa M. Lynch, 1997. "How to Compete: The Impact of Workplace Practices and Information Technology on Productivity," NBER Working Papers 6120, National Bureau of Economic Research, Inc.
  19. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers, Institute for Fiscal Studies W95/17, Institute for Fiscal Studies.
  20. Vodopivec, Milan & Tong, Minna Hahn, 2008. "China : improving unemployment insurance," Social Protection Discussion Papers, The World Bank 44779, The World Bank.
  21. Richard Blundell & Stephen Bond, 2000. "GMM Estimation with persistent panel data: an application to production functions," Econometric Reviews, Taylor & Francis Journals, Taylor & Francis Journals, vol. 19(3), pages 321-340.
  22. Booth, Alison L, 1991. "Job-Related Formal Training: Who Receives It and What Is It Worth?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, Department of Economics, University of Oxford, vol. 53(3), pages 281-94, August.
  23. Barrett, Alan & O'Connell, Philip J., 1999. "Does Training Generally Work? The Returns to In-Company Training," IZA Discussion Papers 51, Institute for the Study of Labor (IZA).
  24. Peracchi, Franco & Perotti, Valeria & Scarpetta, Stefano, 2007. "Informality and social protection : preliminary results from pilot surveys in Bulgaria and Colombia," Social Protection Discussion Papers, The World Bank 41541, The World Bank.
  25. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 70(2), pages 317-341, 04.
  26. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, Elsevier, vol. 68(1), pages 29-51, July.
  27. Carneiro, Pedro & Hansen, Karsten T. & Heckman, James J., 2003. "Estimating Distributions of Treatment Effects with an Application to the Returns to Schooling and Measurement of the Effects of Uncertainty on College Choice," IZA Discussion Papers 767, Institute for the Study of Labor (IZA).
  28. Harley Frazis & Mark A. Loewenstein, 2005. "Reexamining the Returns to Training: Functional Form, Magnitude, and Interpretation," Journal of Human Resources, University of Wisconsin Press, University of Wisconsin Press, vol. 40(2).
  29. Arulampalam, S.W. & Booth, A. & Elias, P., 1995. "Work-Related Training and Earnings Growth for Young Men in Britain," The Warwick Economics Research Paper Series (TWERPS), University of Warwick, Department of Economics 440, University of Warwick, Department of Economics.
  30. David Roodman, 2003. "XTABOND2: Stata module to extend xtabond dynamic panel data estimator," Statistical Software Components, Boston College Department of Economics S435901, Boston College Department of Economics, revised 28 Jul 2014.
  31. repec:fth:coluec:454 is not listed on IDEAS
  32. John Van Reenen, 2000. "Who gains when workers train? Training and corporate productivity in a panel of British industries," IFS Working Papers, Institute for Fiscal Studies W00/04, Institute for Fiscal Studies.
  33. Steve Bond & Måns Söderbom, 2005. "Adjustment costs and the identification of Cobb Douglas production functions," IFS Working Papers, Institute for Fiscal Studies W05/04, Institute for Fiscal Studies.
  34. Ackerberg, Daniel & Caves, Kevin & Frazer, Garth, 2006. "Structural identification of production functions," MPRA Paper 38349, University Library of Munich, Germany.
  35. Bartel, Ann P, 1995. "Training, Wage Growth, and Job Performance: Evidence from a Company Database," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 13(3), pages 401-25, July.
  36. Vodopivec, Milan & Arunatilake, Nisha, 2008. "Population aging and the labor market : the case of Sri Lanka," Social Protection Discussion Papers, The World Bank 44927, The World Bank.
  37. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 70, pages 9.
  38. Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-62, October.
  39. Alba-Ramirez, Alfonso, 1994. "Formal Training, Temporary Contracts, Productivity and Wages in Spain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, Department of Economics, University of Oxford, vol. 56(2), pages 151-70, May.
  40. Barron, John M & Black, Dan A & Loewenstein, Mark A, 1989. "Job Matching and On-the-Job Training," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 7(1), pages 1-19, January.
  41. Milazzo, Annamaria & Grosh, Margaret, 2008. "Social safety nets in World Bank lending and analytical work : FY2002 - 2007," Social Protection Discussion Papers, The World Bank 44730, The World Bank.
  42. Conti, Gabriella, 2005. "Training, productivity and wages in Italy," Labour Economics, Elsevier, Elsevier, vol. 12(4), pages 557-576, August.
  43. Amin, Mohammad, 2009. "Labor regulation and employment in India's retail stores," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 47-61, March.
  44. Milan Vodopivec & Primoz Dolenc:, 2008. "Live Longer, Work Longer: Making It Happen in the Labor Market," Financial Theory and Practice, Institute of Public Finance, Institute of Public Finance, vol. 32(1), pages 65-81.
  45. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  46. Ann P. Bartel, 1992. "Training, Wage Growth and Job Performance: Evidence From a Company Database," NBER Working Papers 4027, National Bureau of Economic Research, Inc.
  47. Braithwaite , Jeanine & Mont , Daniel, 2008. "Disability and poverty : a survey of World Bank poverty assessments and implications," Social Protection Discussion Papers, The World Bank 42754, The World Bank.
  48. Bassanini, Andrea & Booth, Alison L. & Brunello, Giorgio & De Paola, Maria & Leuven, Edwin, 2005. "Workplace Training in Europe," IZA Discussion Papers 1640, Institute for the Study of Labor (IZA).
  49. Edwin Leuven, 2005. "The Economics of Private Sector Training: A Survey of the Literature," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 19(1), pages 91-111, 02.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:wbk:hdnspu:44947. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Raiden C. Dillard).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.