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What do we know about the effects of staff training on companies and individuals?

The following sub-study has been conducted within the framework project “How can the state facilitate the future supply of skills for the business community?” The focus of the framework project is life-long learning and how different public funds can help stimulate conversion and skills development among those established in the labour market. This sub-study deals specifically with the importance of non-formal training for businesses and individuals. We define staff traning as traning intiatives for employed staff that employer either pays for in full or in part or that take place during working hours. The main results indicate that staff training is difficult to evaluate. This means that we still have limited knowledge of the impact of staff training at workplaces. Evaluations conducted previously have in many cases overestimated the impact of staff training, but even though the impact is relatively small, continuous annual investments in staff training can result in multiplier effects that increase the return on training over time. This can result in major differences between individuals in the longer term.

As knowledge is lacking, it is important to have a methodological discussion about a number of different ways to increase knowledge of the impact of staff training on businesses and individuals. This has resulted in some practical guidelines describing how to conduct credible impact assessments of staff training, which may be an important step in motivating and devising a more active staff training policy.

It is generally accepted that a large part of our human capital is formed in adulthood. This takes place, for example, by learning on the job or through more formalised staff training programmes. Such initiatives can result in individuals with equivalent formal qualifications as young people ending up in careers with major differences in terms of, for example, wage levels, working conditions and work environment. There is a relative consensus that the labour market could be made more efficient if employers were stimulated to offer their employees a greater degree of staff training.

Economic research into staff training has, however, been grappling with a number of methodological difficulties over a long period of time. These shortcomings can be summarised in two main points. Firstly, there is a lack of knowledge of the extent to which subsidies for staff training generate deadweight expenses (subsidising training that was to be provided anyway). Secondly, we know surprisingly little about the direct economic impact of staff training. The reason for this is that the lack of randomized field experiments has forced academics and politicians to rely on estimates that are mostly based on methods with uncertain credibility. The lack of knowledge about deadweight expenses and the impact of staff training on businesses and individuals represent serious obstacles to effective policies in this area. It is for these reasons that political measures to achieve this are also rare in Sweden.

This report presents a critical examination of the methods used in studies that have evaluated staff training. Randomized field experiments can be a relatively expensive form of impact assessment. The results suggest that other ways can be found, i.e. that even without randomized field experiments. The possibility of conducting credible evaluations relatively easily can in turn help to motivate and devise a more active policy
in the field of staff training. For example, a high return may indicate a shortage of training for employees, and provide a justification for public support initiatives.

One result of this report is that we will be testing proposed methodological adjustments in an impact assessment that is to be conducted in sub-study 4. If the results are good, it may be relevant to develop a concrete policy proposal based in part on what has been recommended in previous investigations (see, for example, Growth Analysis 2020, SOU 2020:30). These emphasise the importance of relatively generous public funding, preferably within the framework of specific, targeted programmes established in partnership with multiple stakeholders. As it is expensive to evaluate training initiatives using randomized field experiments, the guidelines from this report may represent a cost-efficient alternative that nevertheless delivers results with reasonable credibility. More cost-effective impact evalutations coult lead to a significant improvement in the state of knowledge within organisations and companies, and Sweden could become a pioneer in the field of research into evaluations of staff training. Credible evaluations could also improve our understanding of how individuals’ human capital, productivity and pay develop throughout their working life.

What do we know about the effects of staff training on companies and individuals?

Serial number: PM 2020:22

Reference number: 2020/111

Download the report in swedish Pdf, 1.4 MB.

A partial study of the project:

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