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Documents in EconStor may be saved and copied for your personal and scholarly purposes.You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. licence. www.econstor.eu This paper analyzes the link between firm size and the investment in job training by employers. Using a large firm level data set across 99 developing countries, we show that a strong and positive correlation in the investment in job training and firm size is a robust statistical finding both within and across countries with very different institutions and level of development. However, our findings do not support the view that this difference is mostly driven by market imperfections disproportionally affecting SMEs. Rather, our evidence is supportive of SMEs having a smaller expected return from the investment in job training than larger firms. Therefore, our findings call for caution when designing pro-SME policies fostering the investment in on the job training.
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D I S C U S S I O N P A P E R S E R I E S
MotivationThe international community has long recognized the important role of small and medium enterprise sector (SMEs) in the economies of the developing world. Furthermore, policymakers all over the world worry with how to foster productivity and growth among this group of firms. Moreover, in a modern economy, the investment in human capital is crucial to foster technological adoption and, thus, achieve higher productivity growth. This paper explores a large firm level survey across 99 countries to document the differences in the job training provided by employers across firm size. Our findings show that a strong and positive correlation across the investment in job training and firm size is a robust empirical finding within and across countries with different institutions and income levels. However, our data does not support the view that this difference is fully explained by market imperfections and institutional failures impeding SME development. Rather, it is supportive of SMEs having a smaller expected rate of return from this investment. Finally, our findings call for some caution when designing pro-SME policies tackling these imperfe...