ABSTRACT
The conventional approach to the analysis of skill formation processes tends to focus on education and formal training as the main components. This is partly a consequence of the dominance of human capital theory with its emphasis on education and training as an investment for the individual, the employer and the society. The analogy with physical investment encourages the view of training as a series of finite activities, the more one invests in education and training the greater the return in terms of earnings, productivity and economic growth. The necessity to provide a convenient measure of this investment leads academics to focus on formal education and training provision, as these can be readily derived from government statistics. Years of schooling and length or frequency of training provide convenient measures of the investments made by individuals, organisations and countries in the process of skill formation. As a result the two tend to become equated.
