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The Role of Organization in Firm-Sponsored Training

Author

Listed:
  • David J. Deming
  • Raffaella Sadun
  • Christopher T. Stanton

Abstract

Some firms are more likely than others to invest in workers’ skills. We document this phenomenon and discuss its implications in light of models of firm-sponsored skills training. The data show that better managed firms, even in the same industries and labor markets, are more likely to train, while training clusters around either managerial or frontline worker development. We argue that organizational differences provide incentives for firms to train beyond traditional explanations that focus on labor market frictions. We illustrate how organizational heterogeneity can generate training investments through a knowledge hierarchy framework where top managers with different skills build bespoke organizations tailored to their unique needs. This in turn makes general skill firm-specific, allowing firms to capture returns on training investment.

Suggested Citation

  • David J. Deming & Raffaella Sadun & Christopher T. Stanton, 2026. "The Role of Organization in Firm-Sponsored Training," NBER Working Papers 35920, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:35920
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    More about this item

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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