Firms may train fewer workers due to adverse selection on learning ability.
Training workers can lead to a problem called adverse selection when companies don't know how quickly employees can learn. This can result in less training being provided to avoid hiring workers who might not perform well after training. Even though trained workers can be more productive, their potential is often not fully utilized. If a company hires more workers who are good at learning, it can actually make the inefficiency worse, leading to even fewer workers being trained.