Certification of training and training outcomes

External certification of workplace skills obtained through on-the-job trai ning is widespread in many countries. This may indicate that training is fi nanced by workers, and certification serves to assure the quality of the tr aining offered by the firm. However, other evidence shows that general trai ning is financed by firms, especially in Germany. We show in this paper tha t external certification of training may also be necessary for an equilibri um with firm-sponsored training. Firm financing of training is only possibl e if firms have monopsony power over the workers after training. If the tra ining firm can extract too much of the employment rents, however, workers m ay not have sufficient incentives to put forth effort during training. Cert ification increases the value training to the outside market, and hence to workers, making firm-sponsored training possible, (C) 2000 Elsevier Science B.V, All rights reserved. JEL classification: J24; J31; J41.