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Title:A Product Market Theory of Worker Training PDF Logo
Authors:Gersbach, Hans
Schutzler, Armin
Issue Date:2001
Series/Report no.:IZA Discussion paper series 327
Abstract:We develop a product market theory that explains why firms invest in general training of their workers. We consider a model where firms first decide whether to invest in general human capital, then make wage offers for each others? trained employees and finally engage in imperfect product market competition. Equilibria with and without training, and multiple equilibria can emerge. If competition is sufficiently soft and trained workers are substitutes, firms may invest in non-specific training if others do the same, because they would otherwise suffer a competitive disadvantage or need to pay high wages in order to attract trained workers. Government intervention can be socially desirable to turn training into a focal equilibrium.
Subjects:General training
human capital
oligopoly
turnover
JEL:L43
L92
D42
L22
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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