Estimating Cross-Country Investment in Training: An Experimental Methodology Using PIAAC Data

The present work proposes a novel methodology for the measurement of investment in human capital in the form of training. Differently from existing studies, the expenditures-based approach pursued encompasses investment in formal and on-the-job training, as well as in informal learning and yields estimates that account for both the opportunity and the direct cost of the different forms of training considered. Using a wide array of data sources, including new and rich individual-level data collected through the OECD Programme for the International Assessment of Adult Competencies (PIAAC) survey as well as Labour Force Surveys (LFS) and System of National Accounts (SNA) data, the study proposes estimates of investment in training for the years 2011-2012. These cover 22 OECD countries and are provided at both the economy and industry levels. Estimates suggest that average total investment in training corresponds to 6.7% of gross value added (GVA), with investment in on-the-job training (amounting to 2.4% of GVA, on average) that are substantially in line with those of previous literature. Wide sector and country heterogeneity in the relative importance of investment in formal and on-the-job and informal learning also emerge. On average, production appears more intensive in on-the-job training (relative to other training types) than overall services, but not relative to business services only. Public-oriented services such as education and health services invest a greater (smaller) proportion of total training expenditure in formal (on-the-job) training than other sectors and the overall economy.