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The return to firm investment in human capital

  • Almeida, Rita
  • Carneiro, Pedro

In this paper the authors estimate the rate of return to firm investments in human capital in the form of formal job training. They use a panel of large firms with unusually detailed information on the duration of training, the direct costs of training, and several firm characteristics such as their output, workforce characteristics, and capital stock. Their estimates of the return to training vary substantially across firms. On average it is -7 percent for firms not providing training and 24 percent for those providing training. Formal job trainingis a good investment for many firms and the economy, possibly yielding higher returns than either investments in physical capital or investments in schooling. In spite of this, observed amounts of formal training are small.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3851.

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Date of creation: 01 Feb 2006
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Handle: RePEc:wbk:wbrwps:3851
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