State-Level Policies to Incentivize Workplace Learning: Impacts of a California Publicly Funded Employee Training Program

Abstract

The inability of labor markets to function effectively to satisfy the needs of employers and workers suggests that there is a growing need for policy interventions to promote workplace cultures of learning and innovation. Past research suggests that publicly funded incumbent worker training programs are a promising antidote against market failures. With only a handful of studies published in the last two decades, however, this is one of the least-researched types of business support programs. This paper examines the impact of a state program in California that uses a pay-for-performance approach to reimburse employers that train their employees: the California Employment Training Panel (ETP). Based on a mixed-methods study of ETP, the authors found that, overall, ETP had positive and significant impacts on company sales and firm size. The study suggests the need to abandon ideological debates and engage in more evidence-based policy discussions about incumbent worker training programs.