Dividing the Costs and Returns to General Training

Data from the NLSY indicate that the employer almost always pays the explicit cost of training that the worker receives on the employer's premises and often pays for the explicit costs of off-site general training. An analysis of the data reveals that completed spells of general training paid for by previous employers have a larger effect on the wage than completed spells of general training paid for by the current employer. These findings can be explained by a model in which contract enforcement considerations cause employers to share the returns and costs to even purely general training