Training Subsidies May Not Represent a Wise Use of Societal

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The Answer is Workers that experience job loss because of foreign competition often need to invest in human capital to qualify for other jobs.Society will want to make sure it only invests in human-capital training subsidies when the discounted social benefits exceed the discounted social costs.Workers displaced by trade are often older and less skilled.Consequently,the time horizon over which benefits from training can be enjoyed may be relatively short,implying greater likelihood that the social costs of the investment exceed the social benefits.Furthermore,it may be the case that,being less skilled in the first place,the displaced workers are more present-oriented or find learning new skills more difficult (hence the lesser accumulation of skill),again implying that the social cost of further investment may outweigh the social benefit.

Training Subsidies May Not Represent a Wise Use of Societal

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