Employers’ Investment in Skills: Test of Skills Portability Argument

Abstract

Literature argues that propensity of firm-sponsored training depends on portability of skills. The paper seeks to test this hypothesis with the data from 5th European Social Survey that includes 21 EU Member State, Norway and Switzerland. Becker (1993) argued that employers will only invest in training that is of no use to other firms. The data does not support this hypothesis: European firms frequently invest in training that is highly valuable to other firms. Literature on labour market frictions argues that firms are likely to fund training, if the costs of switching employers’ are high. Data suggests that the reverse might be true: if individual have many outside options, the odds of receiving firm-sponsored training increases.

DOI: http://dx.doi.org/10.5755/j01.ss.84.2.7488