Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/189376 
Authors: 
Year of Publication: 
2006
Series/Report no.: 
Queen's Economics Department Working Paper No. 1100
Publisher: 
Queen's University, Department of Economics, Kingston (Ontario)
Abstract: 
This paper analyses the impact of labor market conditions on a firm's incentive to train its workers. In an equilibrium model of the labor market in which firms use both untrained and in-house trained workers, we show that the incidence of training increases with the tightness of the labor market. In a multi-sector framework, the usual threat of hold-up by a trained worker is more severe for workers who change their sector of work; during downturns, this serves to bias firms' incentives in imparting training away from such workers and towards workers already in the firm and those new workers coming from the same sector. Evidence from the NLSY confirms both predictions --- the incidence and duration of company-sponsored training is adversely affected by higher unemployment rates; furthermore, this negative effect is much stronger for workers who change industries as compared to those who do not.
Subjects: 
firm-sponsored training
labor market tightness
hold up
unemployment rate
JEL: 
J24
J31
J41
Document Type: 
Working Paper

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