Dynamics of Firm’s Investment in Education and Training: An Agent-based Approach

This study developed an agent-based model of firms’ investment dynamics in education and training based on the cellular automata model. It turned the issue of the dynamics of education and training to an issue of spaces and conducted a simulation to analyze whether the strategy of firms investing in education and training will be profitable in the long term. The main results of this study can be summed up as follows: First, strategies that invest in education and training tend to be inferior to strategies that do not invest in education and training. However, even if the former strategies are inferior, a certain proportion of investing firms survive to exist in the long term. The outcome of the strategies does not largely depend on the initial proportion of education and training investment firms Second, an increase in learning speed works disadvantageously to firms that use education and training investment strategies. Third, a reduction in training cost brings a decrease in total production. Fourth, expanding the scope of information raises the productivity of a society, but acts negatively on firms that use education and training investment strategies. Fifth, an increase in the proportion of job searching due to a drop in search costs enhances the productivity of a society but works negatively on firms that use education and training investment strategies. Sixth, the government’s support for training expenses increases total production and the proportion of firms that invested in education and training as well.