The Human Capital of Firms and the Formal Training of Workers

The benefits of formal training are numerous, and yet in many regions few firms utilize them. This study builds on the literature by exploring how two forms of human capital-the quality of management practices and the proportion of university educated employees-influence the adoption of formal training. Using both cross-sectional and panel firm-level data for 29 economies in Eastern Europe and Central Asia and six economies in the Middle East and North Africa, the study finds that firm management practices are positively correlated with the implementation of formal training in Eastern Europe and Central Asia but not in the Middle East and North Africa. The proportion of university educated workers is positively correlated with formal training in both regions, but the finding is more robust for the Middle East and North Africa. These findings imply significant heterogeneity across regions in the determinants of formal training, suggesting that policies should be context specific