Changes in the Stock of On-The-Job Training,Race,and Wage Growth

Abstract

This article analyzes the rate of return to on-the-job-training (OJT) investment and in particular, the different rates of return faced by whites and nonwhites. Using data from the Panel Study of Income Dynamics (PSID) on tenure on a particular job and on the amount of time necessary for the average person to become fully trained on that job, I estimate the amount of training (in months) acquired by each individual on each job held. Log wage growth is then regressed on changes in the stock of training the individual held with the current firm. In one specification, changes in the stock of training are interacted with race dummies. The results suggest that the rate of return to an additional month of training is actually higher for nonwhites than for whites.