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Barriers to entry, deregulation and workplace training: A theoretical model with evidence from Europe

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  • Bassanini, Andrea
  • Brunello, Giorgio

Abstract

We study the impact of regulatory barriers to entry on workplace training. We develop a model of training in imperfectly competitive product and labour markets. The model indicates that there are two contrasting effects of deregulation on training. As stressed in the literature, with a given number of firms, deregulation reduces the size of rents per unit of output that firms can reap by training their employees. Yet, the number of firms increases following deregulation, thereby raising output and profit gains from training and improving investment incentives. The latter effect prevails. In line with the predictions of the theoretical model, we find that the substantial deregulation in the 1990s of heavily regulated European industries (energy, transport and communication) increased training incidence.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 55 (2011)
Issue (Month): 8 ()
Pages: 1152-1176

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Handle: RePEc:eee:eecrev:v:55:y:2011:i:8:p:1152-1176

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Related research

Keywords: Training; Product market competition; Regulatory reform; Europe;

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References

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Cited by:
  1. M. Picchio & J. C. Van Ours, 2011. "Retaining through Training Even for Older Workers," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 11/748, Ghent University, Faculty of Economics and Business Administration.
  2. Katja Görlitz & Joel Stiebale, 2011. "The Impact of Product Market Competition on Employers’ Training Investments. Evidence from German Establishment Panel Data," De Economist, Springer, vol. 159(1), pages 1-23, March.
  3. Picchio, Matteo & van Ours, Jan C., 2011. "Market imperfections and firm-sponsored training," Labour Economics, Elsevier, vol. 18(5), pages 712-722, October.
  4. Bassanini, Andrea & Garnero, Andrea, 2012. "Dismissal Protection and Worker Flows in OECD Countries: Evidence from Cross-Country/Cross-Industry Data," IZA Discussion Papers 6535, Institute for the Study of Labor (IZA).
  5. Aparicio Fenoll, Ainhoa, 2011. "The Effect of Product Market Competition on Job Instability," IZA Discussion Papers 5669, Institute for the Study of Labor (IZA).
  6. Samuel Muehlemann, 2013. "Der Einfluss der Internationalisierung auf die arbeitsmarktorientierte Bildung," Economics of Education Working Paper Series 0092, University of Zurich, Institute for Strategy and Business Economics (ISU).
  7. Brunello, Giorgio & Comi, Simona Lorena & Sonedda, Daniela, 2012. "Training subsidies and the wage returns to continuing vocational training," Labour Economics, Elsevier, vol. 19(3), pages 361-372.

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