Job Training: Costs, Returns, and Wage Profiles

Preprint OPEN
Jacob Mincer (1989)

Using information on time costs of training and gains in wages attributable to training I computed rates of return on training investments. The range of estimates based on several data sets generally exceeds the magnitudes of rates of return usually observed for schooling investments. It is not clear, however, that the difference represents underinvestment in job training. Two methods were used to estimate total annual costs of job training in the U.S. economy, for 1958, 1976, and 1987. The "direct' calculation uses information on time spent in training and on wages. For 1976 so calculated costs amounted to 11.2% of Total Employee Compensation and a half of costs of school education. In the "indirect" method training costs were estimated from wage functions fitted to PSID data. In 1976 the direct estimate amounted to between 65% and 80% of the indirect estimate based on the wage profile. This result represents strong support for the human capital interpretation of wage profiles. The estimates indicate a slower growth of training than of school expenditures in the past decades. Substitution of schooling for job training is a likely cause.
  • References (22)
    22 references, page 1 of 3

    Barron, J. Black, D., and M. Lowenstein, 'Job Matching and On-The Job Training," Journal of Labor Economics, January 1989.

    Bartel, A., "Formal Employee Training Programs," paper presented at Symposium on Job Training, Madison, Wisconsin, May 1989.

    Becker, G. S., Human Capital, 2nd ed., Chicago University Press, 1975.

    Becker, G. and J. Stigler, 'Law Enforcement, Malfeasance, and Compensation of Enforcers," Journal of Legal Studies, 1974.

    Bishop, J., 'On the Job Training of New Hires," paper presented at Symposium on Job Training, Madison, Wisconsin, May 1989.

    Blakemore, A., and Hoffman, D., "Seniority Rules and Productivity," Draft, Arizona State University, 1988

    Brown, J., "Why Do Wages Increase With Tenure?" Draft, SUNY-Stony Brook, 1988.

    Duncan, G. and F. Stafford. 'The Use of Time and Technology by Households in the United States,' Research in Labor Economics, Vol. 3, 980.

    Hoizer, H., 'The Determinants of Employee Productivity and Earnings,' NBER Working Paper No. 2782, December 1988.

    Jovanovic, B., 'Job Matching and the Theoiy of Turnover,' Journal of Political Economy, October 1979.

  • Metrics
    No metrics available
Share - Bookmark