Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
The Role of Organization in Firm-Sponsored Training
Journal of Economic Perspectives
(pp. 185–206)
(Complimentary)
Abstract
Some firms are more likely than others to invest in workers' skills. We document this phenomenon and discuss its implications in light of models of firm-sponsored skills training. The data show that better managed firms, even in the same industries and labor markets, are more likely to train, while training clusters around either managerial or frontline worker development. We argue that organizational differences provide incentives for firms to train beyond traditional explanations that focus on labor market frictions. We illustrate how organizational heterogeneity can generate training investments through a knowledge hierarchy framework where top managers with different skills build bespoke organizations tailored to their unique needs. This, in turn, makes general skill firm specific, allowing firms to capture returns on training investment.Citation
Deming, David J., Raffaella Sadun, and Christopher Stanton. 2026. "The Role of Organization in Firm-Sponsored Training." Journal of Economic Perspectives 40 (4): 185–206. DOI: 10.1257/jep.20261508Additional Materials
JEL Classification
- I26 Returns to Education
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- M53 Personnel Economics: Training