CH 6/ ON-THE-JOB-TRAINING
QUESTIONS AND ANSWERS
Incumbent Firm - Answer--firm where the worker is currently employed
- general skills valuable
- specific skills only are useful at this particular firm
Spot Market - Answer--Competitive market open within a single given time period
-General skills valuable, specific skills not
Assumptions of OJT - Answer-- training costs is equal to firm's contribution plus a
worker's contribution
- worker possess same baseline pre training marginal rate of production at all firms
in the economy , y0
- Each worker's post-training MRP at the incumbent firm equals y1 = (V + y0),
implying V is the value added by training.
- OJT satisfies V> (1+r)i because the training investment payoff should be greater in
value for the firm than the money costs of the training plus interest
- OJT Training provides a surplus to the employer when (V/(1+R))- i> 0
- General human capital training increases wages
Turnover - Answer-- Employees who receive training may quit the job that trained
them in favor of a higher paying job
- firms reduce turnovers by giving workers take-it-or-leave it offers
Medoff and Abraham - Answer-- argue that training does not mean increased
productivity
- argue that a person's performance decreases the longer they stay at a job (based
on performance reviews)
- problematic due to the questionable relationship between performance reviews and
productivity
Take it or leave it - Answer-an employee demands more money to preform a
particular task or they will leave the firm
On the Job Training (OJT) - Answer-- human capital investment undertaken by
working during or outside of normal working hours
- paid for at least in part by the employer
Types of OJT - Answer--learning by doing
- on or off the job training
- formal or information training
- general training (training for common job tasks)
- company specific training (ie specific company computer program training)
Sherwin Rosen Training Theory - Answer--On the job training is an investment and it
increases the value of the employee
- the investment is paid by the firm and employee
QUESTIONS AND ANSWERS
Incumbent Firm - Answer--firm where the worker is currently employed
- general skills valuable
- specific skills only are useful at this particular firm
Spot Market - Answer--Competitive market open within a single given time period
-General skills valuable, specific skills not
Assumptions of OJT - Answer-- training costs is equal to firm's contribution plus a
worker's contribution
- worker possess same baseline pre training marginal rate of production at all firms
in the economy , y0
- Each worker's post-training MRP at the incumbent firm equals y1 = (V + y0),
implying V is the value added by training.
- OJT satisfies V> (1+r)i because the training investment payoff should be greater in
value for the firm than the money costs of the training plus interest
- OJT Training provides a surplus to the employer when (V/(1+R))- i> 0
- General human capital training increases wages
Turnover - Answer-- Employees who receive training may quit the job that trained
them in favor of a higher paying job
- firms reduce turnovers by giving workers take-it-or-leave it offers
Medoff and Abraham - Answer-- argue that training does not mean increased
productivity
- argue that a person's performance decreases the longer they stay at a job (based
on performance reviews)
- problematic due to the questionable relationship between performance reviews and
productivity
Take it or leave it - Answer-an employee demands more money to preform a
particular task or they will leave the firm
On the Job Training (OJT) - Answer-- human capital investment undertaken by
working during or outside of normal working hours
- paid for at least in part by the employer
Types of OJT - Answer--learning by doing
- on or off the job training
- formal or information training
- general training (training for common job tasks)
- company specific training (ie specific company computer program training)
Sherwin Rosen Training Theory - Answer--On the job training is an investment and it
increases the value of the employee
- the investment is paid by the firm and employee
