Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/33937
Authors: 
Gersbach, Hans
Schmutzler, Armin
Year of Publication: 
2006
Series/Report no.: 
IZA Discussion Papers 2403
Abstract: 
We consider a three-stage game to examine how market integration affects firms' incentives to provide general worker training. In stage 1, firms invest in productivity-enhancing training. In stage 2, they can make wage offers for each others' workers. Finally, Cournot competition takes place. When two product markets become integrated, that is, replaced by a market with greater demand and more firms, training by each firm increases, provided the two markets are initially sufficiently concentrated. When barriers between less concentrated markets are eliminated, training is reduced. Integration increases welfare if it does not reduce training. However, for large parameter regions, welfare decreases if integration reduces training. We also show that opening product markets to countries with publicly funded training or cheap, low-skilled labor can threaten apprenticeship systems.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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