The human capital of firms and the formal training of workers

Abstract

Abstract The benefits of formal training are numerous, and yet in many regions few firms utilize them. In this study, we build on the literature by exploring how two forms of human capital–the quality of management practices and the proportion of university educated employees - influence the adoption of formal training. Using both cross-sectional and panel firm-level data for 29 economies in Eastern Europe and Central Asia (ECA) and 6 Middle East and North Africa (MENA) economies, management practices of the firm are found to be positively correlated with the implementation of formal training in ECA but not in MENA. The proportion of university educated workers is positively correlated with formal training in both ECA and MENA, but the finding is more robust for the latter. The study explores potential explanations why management practices have no influence on formal training in MENA and related policy implications.