In this paper we estimate the rate of return to firm investments in human capital in
the form of formal job training. We use a panel of large firms with unusually detailed
information on the duration of training, the direct costs of training, and several firm
characteristics such as their output, workforce characteristics and capital stock. Our
estimates of the return to training vary substantially across firms. On average it is
-7% for firms not providing training and 24% for those providing training. Formal job
training is a good investment for many firms and the economy, possibly yielding higher
returns than either investments in physical capital or investments in schooling. In spite
of this, observed amounts of formal training are very small