Investment in Job Training: Why are Smes Lagging so Much Behind?
World Bank; Institute for the Study of Labor (IZA)
July 1, 2010
World Bank Policy Research Working Paper No. 5358
This paper analyzes the link between firm size and investment in job training by employers. Using a large firm level data set across 99 developing countries, the analysis shows that a strong and positive correlation in investment in job training and firm size is a robust statistical finding both within and across countries with very different institutions and level of development. However, the findings do not support the view that this difference is mostly driven by market imperfections disproportionally affecting small and medium enterprises. Rather, the evidence is supportive of small and medium enterprises having a smaller expected return from the investment in job training than larger firms. Therefore, the findings call for caution when designing pro-small and medium enterprises policies fostering investment in on-the-job training.
Number of Pages in PDF File: 51
Keywords: Education For All, Labor Policies, Microfinance, Primary Education, Labor Marketsworking papers series
Date posted: July 20, 2010
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