A justification for job training programs is that they improve worker productivity. Suppose that you are asked to evaluate whether more job training makes workers more productive. However, rather than having data on individual workers, you have access to data on manufacturing firms in Ohio. In particular, for each firm, you have information on hours of job training per worker (training) and number of non-defective items produced per worker hour (output).
(i) Carefully state the ceteris paribus thought experiment underlying this policy question.
(ii) Does it seem likely that a firm's decision to train its workers will be independent of worker characteristics? What are some of those measurable and un-measurable worker characteristics?
(iii) Name a factor other than worker characteristics that can affect worker productivity.
(iv) If you find a positive correlation between output and training, would you have convincingly established that job training makes workers more productive? Explain.