Workplace Skill Accumulation and its Impact on Earnings and Labor Mobility: The U.S. Experience

Abstract

This paper shifts the discussion in this conference from issues related to human capital creation provided by formal education, to the determinants and outcomes of human capital accumulation that occurs in the workplace after formal schooling has been completed. In recent years this type of human capital creation has received an increasing amount of attention in the U.S. for three main reasons. First, growing international competition has forced firms around the world to identify ways in which they can increase the productivity of their labor inputs. Since labor productivity growth has been much slower in the U.S. than in other countries policies which might stimulate higher productivity growth in the U.S. are viewed as crucial for economic competitiveness. Second, rapid changes in technology, especially in the area of information technology, have resulted in the massive retraining of workers and substantial changes in the skill requirements of workers. This has been felt in all sectors but particularly in industries such as telecommunications. Finally, changing work organizations associated with the switch to “just-in-time” production from “just-in-case” production has resulted in workers rotating through a wider number of jobs. Consequently, they are being trained on-the-job in a wider set of skills. In addition, as firms decrease the number of layers within the organization and push more decisions down on to the line, workers need to have broader abilities to take on these new responsibilities.