ERIC Number: ED317670
Record Type: RIE
Publication Date: 1989-Sep
The Firm's Decision To Train. Background Paper No. 6.
Parsons, Donald O.
This paper provides a critical review of economic models of employers' decisions to train workers: what training is undertaken, where it is undertaken, and who finances it. The focus of the review is on the provision of job training to workers with no unusual training problems. The first two sections consider the nature of on-the-job training more precisely, emphasizing the role of the firm in the supply of on-the-job training opportunities. Two alternative models of on-the-job training are considered and a few implications for the efficient supply of training services are derived. In section 3, a basic investment model of on-the-job training is developed, forming the analytical structure that will be used to frame the discussions to follow. The economic logic of this human capital paradigm is discussed at length because of its central role in forming the economist's conception of this market. In section 4, conditions under which the free market generates an efficient amount of on-the-job training are outlined. The discussion then proceeds to the important issue of why this market may fail to yield efficient results, most prominently the financing problem. The relationship of human capital finance to the deeper issue of property rights structures is explored. Analyses of variations on this fundamental problem comprise much of the remainder of this review, including the policy discussion of the final section. The potential for an alternative supply mechanism, employer training cooperatives, is critically examined. The final section considers ways in which the government can encourage the more efficient provision of on-the-job training. (37 references) (KC)
Descriptors: Adult Basic Education, Corporate Education, Decision Making, Education Work Relationship, Educational Improvement, Educational Needs, Employer Attitudes, Employment Practices, Human Capital, Labor Economics, Labor Needs, Models, On the Job Training, Policy Formation, Postsecondary Education, Public Policy, School Business Relationship
Publication Type: Information Analyses
Education Level: N/A
Sponsor: Department of Labor, Washington, DC. Commission on Workforce Quality and Labor Market Efficiency.
Authoring Institution: N/A
Note: In "Investing in People: A Strategy to Address America's Workforce Crisis" (CE 054 080).