The Role of Organization in Firm-Sponsored Training

David Deming, Raffaella Sadun and Christopher Stanton

No 22045, CEPR Discussion Papers from Centre for Economic Policy Research

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.

Keywords: Firm-sponsored training; On-the-job training; Management practices; Knowledge hierarchies; Organizational design; Human capital (search for similar items in EconPapers)
JEL-codes: J24 L23 M53 M54 (search for similar items in EconPapers)
Date: 2026-10
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