Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76323
Year of Publication: 
2003
Series/Report no.: 
CESifo Working Paper No. 848
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We provide a new explanation for why firms pay for general training in a competitive labor market. If firms are unable to tailor individual wages to ability, for informational or institutional reasons, they will pay for general training in order to attract better quality workers. The market provision of training may well exceed the first best level. Our explanation relies on wage compression within skill categories, while imperfect competition based explanations for firm subsidised general training rely on wage compression across skill categories.
Document Type: 
Working Paper
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