Employer-sponsored training in stabilisation and growth policy perspectives

In Europe, accounting standards prevent larger expenditures on employer-sponsored training from being treated as investments. Using Sweden as example, we discuss two consequences for training.First, the timing: training will be conducted when income is large enough for training costs to be deducted without loss. This is more often possible during booms than recessions, providing a stabilization policy dimension to training.Second, the volume: the training opportunity cost (foregone production) is largest during booms. Hence, training tends to be smaller than if conducted during downturns, possibly limiting growth.We formulate two proposals that can make training more counter-cyclical and increase the amount of training.

Introduction: The discussion in this paper lies on the borderline between economics and business administration. It is motivated by an institutional characteristic, namely the norms and standards determining how firms’ training expenditures are treated in the accounting system. This is a business administration consideration. Our interest in this institutional characteristic stems from the fact that it is most likely to affect both the timing and the volume of employer-sponsored training, i.e. training that is partly or wholly paid for by the employer. These effects are aspects of economics, via their connections to stabilization and growth policy issues.

Author: Christina Hakanson,Satu Johanson, Erik Mellander

Source: Institute for Labour Market Policy Evaluation

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