Core readings

Thorndike, Edward L, (1901). “Animal intelligence:  An experimental study of the associative processes in animals,” Psychological Review Monograph Supplement, 2:1-109.  

Early evidence on learning-by-doing from psychology. 

Becker, G.S. 1964. Human Capital. Chicago: University of Chicago Press.

The first, and one of the best expositions of the theory of general and specific human capital, its implications for workers’ education and training decisions, and for employers’ training and pay policies. 

MacLeod, W. Bentley and Voraprapa Nakavachara. 2007. “Can Wrongful Discharge Law Enhance Employment?” Economic Journal 117(521): F218–F278,

While Chapter 13 argued that employment protection laws can harm the hiring prospects of risky workers, MacLeod and Nakavachara argue that EPLs may have some efficiency benefits when it comes to worker training.  Especially in occupations characterized by high levels of on-the-job skill investment, EPLs may give workers the security that is needed to make those investments economically attractive to them.  

Starbucks.  Starbucks College Achievement Plan ( visited January 29, 2015).

This site provides an introduction to the Starbucks College Achievement plan for the company’s employees. Every benefits-eligible U.S. partner working part- or full-time receives 100% tuition coverage for a first-time bachelor’s degree through Arizona State University’s online program.  Since a college degree is a general skill (i.e. valued by many employers) Gary Becker’s model suggests that paying workers to acquire it is not in Starbucks’ interest. Other observers have argued, however, that Starbuck’s plan pays for itself by inducing a profitable form of worker self-selection:  essentially, Starbucks has found that people who place a high value on acquiring a college degree tend to also be better and more reliable baristas and store managers.

Garicano, Luis, and Luis Rayo. 2017. "Relational Knowledge Transfers." American Economic Review, 107 (9): 2695-2730.

This theoretical paper shows that long apprenticeship periods with low pay can allow profit-maximizing firms to provide general-skills training to workers.  The employer rationally delays the transfer of knowledge to prevent the apprentice from leaving before the employer has recouped its training costs.  As a result, training periods are excessively long, relative to a world in which employers and workers can write binding training contracts.  

Newer Resources

Training

de Grip, Andries and Jan Sauermann, (2011). “The Effects of Training on Own and Co-Worker Productivity: Evidence from a Field Experiment," IZA Discussion paper number 5876.

Combines a field experiment that randomly assigned workers to treatment and control groups with panel data on individual worker productivity before and after training, to identify causal effects from training. Results suggest that participation in the training program leads to a 9 percent increase in productivity.

Jason M., Hockenberry and Helmchen, Lorens A., (2014). “The nature of surgeon human capital depreciation,” Journal of Health Economics, 37(C):70-80.

Analysis of 188 surgeons who performed 56,315 CABG surgeries in Pennsylvania between 2006 and 2010 shows that a surgeon's additional day away from the operating room raised patients’ inpatient mortality by up to 0.067 percentage points (2.4% relative effect) but reduced total hospitalization costs by up to 0.59 percentage points. 

Ost, Ben, (2014). “How Do Teachers Improve? The Relative Importance of Specific and General Human Capital,” American Economic Journal, 6(2):127-51.

Separately identifies the benefits of general teaching experience and specific curriculum familiarity. Finds that both specific and general human capital contribute to teacher improvement and that recent specific experience is more valuable than distant specific experience.     

Haggag, Kareem., Brian McManus, and Giovanni Paci, (2017). "Learning by Driving:  Productivity Improvements by New York City Taxi Drivers," American Economic Journal, 9(1):70-95.

Studies learning by doing by New York City taxi drivers, who have substantial discretion over their driving strategies and receive compensation closely tied to their success in finding customers. Findings suggest that: new drivers lag further behind experienced drivers when in difficult situations, and drivers benefit from accumulating neighborhood-specific experience.

Hoffman, Mitchell and Stephen V. Burks, (2017). “Training Contracts, Employee Turnover, and the Returns from Firm-sponsored General Training,” NBER working paper number 23247.

Plausibly exogenous contractual variation from a leading trucking firm suggests that two training contracts significantly reduced post-training quitting. A structural model further shows that observed worker quit behavior exhibits aspects of optimization, and the contracts increased firm profits and reduced worker welfare.  

Ramadas, Kamalini., Khaled Saleh, Steven Stern and Haiyan Liu, (2017). “Variety and Experience: Learning and Forgetting in the Use of Surgical Devices,” Management Science.

Hand-collected data set of hip replacement surgery shows that the first use of certain evice versions can result in at least a 32.4% increase in surgery duration even for experienced surgeons. Furthermore, with the passage of time, surgeons can forget knowledge gained about the use of particular devices. 

Adhvaryu, Achyuta., Namrata Kala and Anant Nyshadham, (2018). “The Skills to Pay the Bills: Returns to On-the-job Soft Skills Training,” NBER working paper number 24313.

Evaluates the causal impacts of on-the-job soft skills training on the productivity, wages, and retention of female garment workers in India. Shows that treated workers were 20 percent more productive than controls post-program, wages rise very modestly with treatment and the net return to the firm was large.

Becker, Sascha O.,  Irena Grosfeld, Pauline Grosjean, Nico Voigtländer and Ekaterina Zhuravskaya, (2018). “Forced Migration and Human Capital: Evidence from Post-WWII Population Transfers,” NBER Working Paper No. 24704.

Combines historical censuses with newly collected survey data to show that, while there were no pre-WWII differences in education, Poles with a family history of forced migration are significantly more educated today.   Thus, acquiring human capital is a safe investment for people at risk of losing everything else.  

Chan C. David, (2018). ” Learning on the Job: Evidence from Physicians in Training,” Stanford University, JEL, Codes: D83, L23, M53.

Builds a simple structural model of Bayesian information aggregation and define a benchmark of static efficiency that allocates influence to make the best decision using knowledge at hand. The vast majority of learning occurs only after trainees are senior and can influence decisions. Trainees exert much more influence than is statically efficient relative to their supervisors, possibly because such influence allows trainees to learning experientially. 

Kuka, Elira, Na'ama Shenhav, and Kevin Shih, (2018). “Do Human Capital Decisions Respond to the Returns to Education? Evidence from DACA,” NBER working paper number 24315.

Using a sample of young adults that migrated to the U.S. as children to implement a difference-in-differences design that compares non-citizen immigrants ("eligible") to citizen immigrants ("ineligible") over time. It shows that DACA significantly increased high school attendance and high school graduation rates, reducing the citizen-noncitizen gap in graduation by 40%.  Thus, increasing the probability you'll be allowed to use your training in the future increases workers' investments in training.

Doepke, Matthias and Ruben Gaetani (2020) Why Didn't the College Premium Rise Everywhere? Employment Protection and On-the-Job Investment in Skills NBER working paper no. 27331

The authors develop a model where firms and workers make relationship-specific investments in skill accumulation. The incentive to invest is stronger when employment protection creates an expectation of long-lasting matches.  The authors argue that the relative decline of employment protection for less-educated workers in the U.S. (compared to Germany), can account for much of decline in those workers’ earnings in the U.S, compared to the better-protected workers in Germany.

John P. Papay, Eric S. Taylor, John H. Tyler and Mary E. Laski. “Learning Job Skills from Colleagues at Work: Evidence from a Field Experiment Using Teacher Performance Data” American Economic Journal: Economic Policy 2020, 12(1): 359–388. 

Asking teachers with high and low levels of a particular skill to work together on skill improvement improves student by 0.12 standard deviations in the low-skilled teachers’ classrooms. This field experiment shows that information exchange between workers is an important component of the job training process.  

Gong, Jie, Ang Sun and Zhichao Wei. “Choosing the Pond: On-the-Job Experience and Long-run Career Outcomes.” Management Science, Vol 64, Issue 2 (2018): 860–872

Access to projects that offer the opportunity for skill building is widely considered to be a desirable feature of a job.  Measuring the effects of such learning opportunities, however, is challenging because employers might give the most desirable opportunities to workers who would advance in their careers regardless. To circumvent this problem, the authors compare soccer teams that were marginally demoted from the English Premier League with marginally non-demoted teams.  The incumbent players in the marginally demoted teams play significantly more matches, move to better leagues, and earn higher salaries in the long run. These results suggest the opportunity to play has a strong effect on career success—strong enough to outweigh the advantages of being in a more prestigious league. 

Deming, David J. 2021 The Growing Importance of Decision-Making on the Job NBER working paper no. 28733. 

As machines continue to replace people in routine tasks, the tasks left to humans require them to make more open-ended decisions using “soft” skills such as problem-solving, critical thinking and adaptability. This paper documents growing demand for decision-making and explores its consequences for life-cycle earnings. Career earnings growth in the U.S. more than doubled between 1960 and 2017, and the age of peak earnings increased from the late 30s to the mid-50s:  people appear to improve longer and peak later in life.  Much of this shift is explained by increased employment in decision-intensive occupations.

Gibbs, Michael. 2021 Job Design, Learning & Intrinsic Motivation  IZA DP No. 14285

The author argues that the enjoyment people derive from learning may be an important source of intrinsic motivation: Learning may make work less onerous, or the employee may value it in and of itself. Learning also interacts with multi-tasking, since jobs with multiple tasks offer more opportunities to learn.  In the paper, the author discusses the optimal design of incentive pay, and optimal job design when different tasks offer different learning opportunities and workers enjoy learning.

Chen, Yiqun Team-Specific Human Capital and Team Performance: Evidence from Doctors American Economic Review, 111(12):3923-62.

 In addition to general human capital, economists have demonstrated the importance of firm-specific, industry-specific, and occupation-specific human capital (i.e. skills that are accumulated with experience in a given firm, industry and occupation, and that aren’t portable to other firms, industries and occupations).  In workplaces, another potential type of human capital is team-specific.  Using administrative Medicare claims for two heart procedures, this paper shows that two-doctor teams (consisting of proceduralist and one specialist) who work together for a longer period of time become more productive; these increases in productivity are not portable if the doctors move to new teams. In this context, these increases in team-specific human capital take the form of substantial reduction in patient mortality.

Butrymowicz, Sarah and Meredith Kolodner 2022. Trucking Companies Train You on the Job. Just Don’t Try to Quit. New York Times, April 5, 2022.

This article describes recent contracts in the trucking industry that pay for workers’ training, but obligate workers to in return for a minimum stay with the employer. 

Caplin, Andrew, Minjoon Lee, Søren Leth-Petersen, Johan Saeverud & Matthew D. Shapiro 2022 How Worker Productivity and Wages Grow with Tenure and Experience: The Firm Perspective NBER working paper no 30342.

This paper uses direct measures of worker productivity to study the effects of a worker’s within-firm versus total experience on their productivity growth.  They find that on-the-job productivity growth exceeds wage growth.  Consistent with Becker’s model of firm-specific human capital, this suggests that firms and workers share the returns to training.  While the patterns vary across types of work, they also find overall previous experience is far less than perfect substitute for experience in the current job.

Adhvaryu, Achyuta, Namrata Kala, and Anant Nyshadham 2023 Returns to On-The-Job Soft Skills Training Journal of Political Economy, forthcoming.

While employers frequently mention the importance of ‘soft skills’, measuring their causal effect on productivity has been difficult.  The authors use a field experiment in Indian garment factories to  measure the effects of a program called Personal Advancement and Career Enhancement (P.A.C.E.), which provides training in life skills such as communication, time management, problem solving and decision-making, and effective teamwork.  The authors find productivity gains of 13.5 percent from the program.

Benefits

Bartel, Ann P., Maya Rossin-Slater, Christopher J. Ruhm, Meredith Slopen, and Jane Waldfogel (2021) The Impact of Paid Family Leave on Employers: Evidence from New York IZA discussion paper no. 14262. 

To study how employers were affected by New York’s 2018 Paid Family Leave policy, the authors surveyed matched pairs of New York and Pennsylvania firms concerning a variety of HR issues before and after New York’s policy was introduced.  They found that paid family leave increased employers' rating of their ease of handling long employee absences. 

 Tô, Linh T. 2021 The Signaling Role of Parental Leave Unpublished paper, Boston University.

To signal their commitment to their firm and their careers, workers may forgo taking paid parental leave.  When workers have a choice of taking different amounts of leave, however, the signals sent by workers’ leave-taking become more complicated.  The author studies this relationship using administrative data from Denmark and a parental leave policy that extended the maximum allowed duration of parental leave.