Institutional Incentives for Employer Training

Although training and new work organization appear able to increase organizational performance, many features of the organization's environment can discourage high‐skill workplaces. Imperfect measurement of investment in people can lead government deficit‐cutters to cut high‐payoff investments; balanced budget rules to increase future deficits; and private investors to locate both financial and direct foreign investment in locations that do not maximize expected returns. Both the public and private sectors can improve their measurement of investment in people by working together to identify reliable and valid indicators of these investments, and by promoting benchmarking and certifications of workers and workplaces with high skills.