ERIC Number: ED315530
Record Type: RIE
Publication Date: 1989-Feb
Reference Count: N/A
Public Subsidies and Private Training.
Vaughan, Roger J.
Overall, federal and state tax codes treat employer investments in human capital more favorably than investment in physical plant and equipment. The most important advantage is that training expenditures can be dispensed immediately, rather than depreciated over time, possibly resulting in a subsidy of 33 percent. In addition, employers who use public institutions to train their workers will rarely have to pay the full cost of these services. Employer-provided training is important for the overall growth of the economy and an important way in which many people acquire more marketable skills. However, there is no strong case for further subsidies to encourage employers to invest more in the work force. The evidence of overall underinvestment in the United States does not imply that there is underinvestment in human capital acquired on the job. Employers can use contracts to capture the benefits of the training for which they pay. However, employer-provided training rarely compensates for poor education--rather, it is concentrated on employees who are well-educated. Many useful mechanisms for subsidizing employer training of the work force are in place. Most public training institutions are already developing programs to train workers for local businesses and to train economically disadvantaged workers. Because employer training is complementary to basic education, the best way to encourage employers to invest more in the work force is to reduce the number of high school dropouts and to improve the quality of basic education. (Author/KC)
Publication Type: Information Analyses; Speeches/Meeting Papers
Education Level: N/A
Sponsor: National Assessment of Vocational Education (ED), Washington, DC.
Authoring Institution: Columbia Univ., New York, NY. Inst. on Education and the Economy.
Note: Paper presented at the Conference on Employer-Sponsored Training (Alexandria, VA, December 1-2, 1988). Blurred type may affect legibility. For related documents, see ED 283 020, ED 290 881, ED 299 412, ED 297 150, CE 053 752-774, and CE 053 783-797.