According to Mincer (1989) if firm gives specific training that will be more useful in the firm. Potential layoff demotivate workers from such investments, although potential leaves discourage employers from devoting in their workers. The resolution is a sharing cost of investment in specific training by employers and workers that produces mutual prevention. Quits and redundancies are predicted to be less frequent where specific training is important.
If training is fully convertible, neither leaves and nor downsizings matter to workers gain from training, and their mobility is not affected. Firm’s investments would be danger in that case when they have no encouragement to funding such training. Note that the information on the occurrence and capacity of training conveys us neither what portion of it is specific and nor inform to what portion of cost employees and employers bear. Mincer (1997) discussed the work of Yoram’s model that formal or informal on-the-job training is the major productivity building investment, after completion of schooling. The importance of training and development is utmost at all levels of employees. Nishtha and Amit (2010) suggest the reason behind this essentiality that over a period of time the skills reduce down and become obsolete gradually which requires the restoration of those.
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When considered as a process, the training is one of the most persistent method to communicate goals to employees and enhance the productivity of individuals (Ekaterini et al., 2009). There is also consensus that training has an impact on employee’s behavior and working skills which, in turn, helps to raise the performance of employees and also brings constructive changes in them (Satterfield ; Hughes, 2007). The study conducted by Harris and Bonn (2000) found that majority of their respondents indicated that their training mainly consisted of on-the-job training thus they expressed that there should be on the job training continuously as it provides the opportunity to new ways of learning and this should be the focus of on the job training. Menard (2009) discusses about the training techniques for workers in the specific contexts which can help to retain and attract them because it’s a critical factor in the life of organization. The application of training in the field of education is also vast. In a study of training application to schools indicates that the proper application of training turns out to be an energetic advantage which eventually improves the productivity of employees as well as increasing their satisfaction (Eaglen et al., 2000).
To the learning side of training process in education, Sparks and Horsley (1990) highlight that although it is established that in service training enhances the quality of teaching along with educational innovation implementation, yet there is lot to be discovered about the how the process of in service training takes place. Tax and brown (1998) also found that training plays an important role in improving the capabilities of employees like creative thinking. The training alone cannot simply add up to the capabilities of employees but it need the presence of a quality management program that will support to enhance the workers productivity.A study in Italy has examined the effects of training on productivity and wage and shared the finding on benefits if training on both the worker and the firm. Conti (2005) used original data sets through a longitudinal study and found that an increase in wages causes increase in productivity which means that the investment in training pays off so encouraging the firms to invest more in it.Paun (2002) suggests that the quality of a training system is exhibited in the quality of a student. This quality can be maintained by the careful designing of training which shall include standardization of skills, the expectation on the performance improvements and the criteria on which it has to be measured, information accessibility skills, and designs of teaching etc.
According to Elnaga and Imran (2001) the training purpose and objectives need to be very specific and clarified so that the employees who participate in training must know what they will attain after the training in the form of knowledge skills and abilities which will ultimately help in their performance improvement on the job. If done so, the study reveals that training does enhance the competencies of both the old and new employees. The investments in training bring high returns as well as bringing competitive advantage. Among many methods used by organization to overcome the performance issues of employees, training is one of them with ultimate goal of performance improvement and productivity enhancement.
According to Kayhana and Koooca (2011) for better results of training programs there shall be standardized training periods and curriculum so that the knowledge and competence of employees is also at its best. In the view of Kim and Ployhart (2014) the internal training enhances the profit growths.According to Sepulveda (2009) skill acquisition through formal training programs is believed to have large positive effects on workers’ future wages. While this effect has been widely documented, there is much less evidence that training has any effects on firm or industry level performance outcomes, such as productivity or profits. Identifying such effects is important for two reasons. From an individual worker perspective, it is now clear that the evidence on the wage effects of training cannot be used to infer the extent of its productivity effect (Sepulveda, 2009).According to Bartel (1994) a recent report prepared by the congressional Office of Technology Assessment (1990) concluded that American workers need more training if the United States is to remain internationally competitive.
The basic premise of the OTA report was that training enhances labor productivity and American workers are less productive than their foreign counterparts because of inadequate training. A number of labor economists have attempted to demonstrate empirically the relationship between training and labor productivity utilizing data on individual workers. Since data on labor productivity are very limited, these studies take an indirect approach, relying on the observed relationship between training and wages as evidence of a relationship between training and productivity as referred by Bartel (1994) to others (e.g., Brown, 1989; Lillard ; Tan, 1986; Lynch, 1992).Olivero and Kopelman (1997) analyzed the effects of off-the-job training given to 31 top level managers in a public sector, service providing enterprise on their productivity. Training imparted covered areas like goal-setting, collaborative problem solving, supervisory involvement, evaluation of end results, etc.
They found a positive correlation of 0.22 between training given and resultant increase in productivity (Davar ; Parti, 2013). Also Booth and Bryan (2005) investigate the effects of asymmetry of information about the value of firm-provided training, where the firm providing general training knows its value but other firms do not. This can affect training transferability in an otherwise competitive labor market. For example, according to the asymmetric information model of Acemoglu and Pischke (1998) training is rewarded more in the current firm than in outside firms. This is because the current firm will pay higher wages to retain high-ability workers, whereas low-ability workers will be dismissed.
Some of the high-ability workers who need to leave their jobs will be treated as low-ability workers in the outside market. The research suggest that because training and ability are complements, training will be valued less for workers who have been laid off or who have quit. Consequently, in the outside market these workers will receive lower returns to their training (Booth ; Bryan, 2005).Blundell et al.
,(1999)In a competitive labour market where wages reflect the marginal product of workers, to be able to command higher earnings, the better-educated or more-trained workers must be sufficiently more productive in employment than their less-skilled counterparts. According to Blundell et al., (1999) most empirical studies, training is distinguished from formal school and post school qualifications (which are viewed as education) and is generally defined in terms of courses designed to help individuals develop skills that might be of use in their job. What is clear from the studies looking at the returns to training and participation in training is that using highly-aggregated descriptions of ‘training’ misses important differences in the determinants and effects of different forms of training. According to Galasi (2004) job training is an important element of both the labour market and the educational system.
In the 1990s, training seems to be more important as ever in Hungary, especially among young higher-education graduates. When leaving full-time education many higher-education graduates continue accumulating knowledge and skills through formal or informal, on-the-job or off-the-job training. Training might improve the productivity of young school-leavers, contribute to forming better job-employee matches, ameliorate their opportunity for obtaining stable and higher paid jobs. Bishop (1994) concludes that employer provided training raises this subjective productivity measure by almost 16 percent.
Bartel (1989) finds evidence that returns to training investments increase productivity on the order of 16 percent. In a follow-up study using longitudinal data on manufacturing firms, Bartel (1992) found that lagged training investments rather than current training yield positive effects on productivity.For nonmanufacturing, the content of the training programs provided by employers seems to have an important impact on productivity. In particular, computer-skills development has a significant and positive impact on establishment productivity, even controlling for industry. presented in Alan Krueger (1993), where result suggests that it is not so much whether you train workers, but rather what you train the workers in that affects establishment productivity (Black ;Lynch, 1996).
Braga (2018), also found that the employers provide more on job training to educated workers (with a bachelor degree) as compared to others. They also suggest that the interaction between education and experience becomes insignificant when the past on the job training is controlled. They also suggest that the high skilled workers have more bargaining power as compared to low skilled workers which in turn determines the earnings of a worker. On the job training variables can also be used by the educated workers to forecast things and become a cause of decrease in the human capital stock of the organization.
Their study also finds out that the workers get more on join training at the beginning of their career. This relationship is affected only when the training variables are included which may be vocational and/or polytechnic trainings. The study confirms that the returns to schooling is a good estimate of real productivity differentials as given by Mincer’s model.
The earning differential corresponds to productivity also (Jones, 2001).According to Tudor (2015) the trainings should focus on professional flexibility, involvement of professionals, and concern for developments in the form of professional as well as personal. Hidalga and Gallego (2016) stress the importance of professional identity of teachers besides the training. Their study is focused on Spanish secondary school teachers and they found that effective training needs the development of professional identity of school teachers because this professional image is carried out from their own experiences during their school times.
Ana (2015) has also shown the significance of secondary school teaching and improvements required to bring newness in this level of teaching in the Spanish context. The research highlights the need of specialized scientific training for teachers which improves them according to the changing dynamics of school teaching instead of conventional knowledge transmitter role. Ana (2015) refers to both the studies of Gonzalez and Sanmamed (2009) and Bolivar and Ruano (2012) who also stress the significance of teacher training. Of course, learning and training also occur outside of schools, especially on jobs.
Even college graduates are not well prepared for the labor market when they leave school, and they are fitted into their jobs through formal and informal training programs. The limited information available indicates that on-the-job training is an important source of the very large increase in earnings as workers gain greater experience at work. And recent bold estimates by Jacob Mincer suggest that the total investment in on-the-job training may be almost as large as the investment in education.
It surely is no accident, for example, that Japan’s system of lifetime employment at large companies originated after World War II when they began to upgrade their technology rapidly partly by investing heavily in the training of employees (Becker, 1994).