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Firms' Training Decisions and Unemployment in Italian Labour Markets

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  • Maria De Paola

    ()
    (University of Calabria)

  • Vincenzo Scoppa

    ()
    (University of Calabria)

Abstract

Some recent theories of human capital investments show that firms could be interested in paying for the general training of their workers. However, when search costs are low because there is a large availability of skilled workers on the market (that is, when the skilled unemployment/vacancy ratio is high), firms might find it optimal to hire skilled workers on the market rather than provide training to inexperienced workers. In this paper, these aspects are studied through a model with search and matching frictions. In order to empirically verify the relationship between training and labour market tightness across Italian regions, we use, as exogenous determinants of unemployment, the regional differences in separation rates and in labour productivity (in face of a centralised wage bargaining system). Consistently with theoretical predictions, the evidence shows that training is negatively influenced by unemployment and turnover while labour productivity has a positive effect on it.

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Bibliographic Info

Article provided by GDE (Giornale degli Economisti e Annali di Economia), Bocconi University in its journal Giornale degli Economisti e Annali di Economia.

Volume (Year): 61 (2002)
Issue (Month): 1 (June)
Pages: 103-126

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Handle: RePEc:gde:journl:gde_v61_n1_p103-126

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Related research

Keywords: training; unemployment; Italian labour markets; productivity differentials; turnover;

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References

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  1. Gilles Saint-Paul, 1994. "Are the Unemployed Unemployable?," IMF Working Papers 94/64, International Monetary Fund.
  2. Peraita, Carlos, 2001. "Testing the Acemoglu-Pischke model in Spain," Economics Letters, Elsevier, vol. 72(1), pages 107-115, July.
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  7. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
  8. John M. Barron & Mark C. Berger & Dan A. Black, 1997. "On-the-Job Training," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number ojt, December.
  9. Haskel, Jonathan & Martin, Christopher, 1993. "Skill Shortages, Productivity Growth and Wage Inflation in UK Manufacturing," CEPR Discussion Papers 859, C.E.P.R. Discussion Papers.
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  13. De Paola Maria & Lupi Claudio & Ordine Patrizia, 2001. "A Tale on Information and Wage Expectations," ISAE Working Papers 22, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
  14. Aghion, Philippe & Howitt, Peter, 1994. "Growth and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 477-94, July.
  15. Katz, Eliakim & Ziderman, Adrian, 1990. "Shared investment in general training : the role of information," Policy Research Working Paper Series 535, The World Bank.
  16. Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-62, October.
  17. Faini, Riccardo & Galli, Giampaolo & Gennari, Pietro & Rossi, Fulvio, 1997. "An empirical puzzle: Falling migration and growing unemployment differentials among Italian regions," European Economic Review, Elsevier, vol. 41(3-5), pages 571-579, April.
  18. Acemoglu, Daron, 1997. "Training and Innovation in an Imperfect Labour Market," Review of Economic Studies, Wiley Blackwell, vol. 64(3), pages 445-64, July.
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