We study how firms shape on-the-job training along the development path. Using data from over 100 countries, we document that smaller firms consistently offer fewer training opportunities to their workers. Administrative data from China and Mexico show that differences in productivity and labor shares are key determinants of this pattern. We then develop a general equilibrium model in which firm heterogeneity interacts with labor market frictions to determine firms' incentives to invest in training. A quantitative version of the model, calibrated to match economies at different income levels, shows that labor market frictions are the primary driver of cross-country training gaps and generate substantial inefficiencies in training provision. Policy analysis shows that optimal training subsidies are higher for smaller firms, and thus for poorer countries, although even a uniform subsidy can generate substantial output gains across countries.