Dividing the Costs and Returns to General Training

Abstract

Data from the National Longitudinal Survey of Youth indicate that the employer often pays the explicit costs of not only on‐site training but also off‐site general training. Although few of these costs appear to be passed on to workers in the form of a lower wage while in training, completed spells of general training paid for by previous employers have a larger wage effect than completed spells of general training paid for by the current employer. A model where contract enforcement considerations cause employers to share the costs and returns to purely general training can explain these findings.