On-the-job training Much of the labor market-usable skills that workers possess are not acquired through formal education but rather through on-the-job training. Such training may be somewhat formal; that is, workers can undertake a structural internship program or an apprenticeship program. On the other hand, on-the-job training is often highly informal and therefore difficult to measure or even identify. Less experienced workers often engage in “learning by doing”; they acquire new skills simply by observing more skilled workers, filling them in when they are sick or on vacation, or engaging in informal conversations during coffee breaks.1.1 Costs and BenefitsLike formal education, on-the-job training involves present sacrifices and future benefits. It is therefore an investment in human capital and can be analyzed through the net present value and the internal rate of return. When deciding whether to provide on-the-job training, a business will weigh the expected additional revenue generated by the training against the costs incurred to provide it. If the net present value of the training investment is positive, the firm will invest; if negative, it won't. Alternatively, the firm will invest if the internal rate of return on the investment exceeds the interest cost of the loan. For employers, providing training can involve direct costs such as classroom instruction or increased worker supervision, along with indirect costs such as reduced workers' output during the training period. Workers may have to accept the cost of lower wages during the training period. The potential benefit to the firm is that a skilled workforce will be more productive and therefore contribute more to the firm's total revenue. Sim... middle of the paper... post-training marginal revenue product inequality: The employer will normally not be willing to pay for general training. The employer does not have the possibility of obtaining a return on his investment in training by paying a wage lower than the worker's marginal income product. Why should the employer bear the overall costs of training when the benefits accrue exclusively to the trained employee in the form of higher wages? To repeat: the worker pays for the overall training costs by accepting a lower wage than the untrained worker (Wt versus Wu) during the training period. Incidentally, the fact that competition will drive a worker's wage rate up to equality with his highest post-training marginal revenue product (MRPp), and thus preclude a return to the employer, explains why l General education typically takes place in schools and not in the workplace..