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Training, Search and Wage Dispersion

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  • Chao Fu

    (University of Wisconsin-Madison)

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    Abstract

    This paper combines on-the-job search and human capital theory to study the coexistence of firm-funded general training and frequent job turnovers. Although ex ante identical, firms differ in their training decisions. The model generates correlations between various firm characteristics that are consistent with the data. Wage dispersion exists among ex ante identical workers because workers of the same productivity are paid differently across firms, and because workers differ in their productivity ex post. Endogenous training breaks the perfect correlation between work experience and human capital, which yields new insights on wage dispersion and wage dynamics. (Copyright: Elsevier)

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    File URL: http://dx.doi.org/10.1016/j.red.2010.11.003
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    Bibliographic Info

    Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

    Volume (Year): 14 (2011)
    Issue (Month): 4 (October)
    Pages: 650-666

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    Handle: RePEc:red:issued:10-77

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    Related research

    Keywords: On-the-job search; On-the-job training; General human capital; Wage dispersion; Wage persistence; Wage growth;

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    References

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    1. Moen, Espen R. & Rosén, Åsa, 2002. "Does poaching distort training?," Working Paper Series 4/2002, Swedish Institute for Social Research.
    2. Postel-Vinay, Fabien & Robin, Jean-Marc, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," CEPR Discussion Papers 3548, C.E.P.R. Discussion Papers.
    3. Jesper Bager & Francois Fontaine & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "A Feasible Equilibrium Search Model of Individual Wage Dynamics with Experience Accumulation," 2006 Meeting Papers 679, Society for Economic Dynamics.
    4. Lisa M. Lynch & Sandra E. Black, 1998. "Beyond the incidence of employer-provided training," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 52(1), pages 64-81, October.
    5. 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.
    6. Bruce C. Fallick & Charles A. Fleischman, 2001. "The importance of employer-to-employer flows in the U.S. labor market," Finance and Economics Discussion Series 2001-18, Board of Governors of the Federal Reserve System (U.S.).
    7. Katz, Eliakim & Ziderman, Adrian, 1990. "Investment in General Training: The Role of Information and Labour Mobility," Economic Journal, Royal Economic Society, vol. 100(403), pages 1147-58, December.
    8. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
    9. Kenneth Burdett & Carlos Carrillo‐Tudela & Melvyn G. Coles, 2011. "Human Capital Accumulation And Labor Market Equilibrium," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(3), pages 657-677, 08.
    10. Lynch, Lisa M, 1992. "Private-Sector Training and the Earnings of Young Workers," American Economic Review, American Economic Association, vol. 82(1), pages 299-312, March.
    11. 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.
    12. Espen R. Moen & �sa Rosén, 2004. "Does Poaching Distort Training?," Review of Economic Studies, Oxford University Press, vol. 71(4), pages 1143-1162.
    13. Helen Connolly & Peter Gottschalk, 2008. "Wage Cuts as Investment in Future Wage Growth," LABOUR, CEIS, vol. 22(1), pages 1-22, 03.
    14. Rubinstein, Yona & Weiss, Yoram, 2006. "Post Schooling Wage Growth: Investment, Search and Learning," Handbook of the Economics of Education, Elsevier.
    15. Ken Burdett & Melvyn Coles, 2003. "Equilibrium Wage-Tenure Contracts," Econometrica, Econometric Society, vol. 71(5), pages 1377-1404, 09.
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    Cited by:
    1. Ronald Wolthoff, 2013. "It's About Time: Implications of the Period Length in an Equilibrium Search Model," Working Papers tecipa-476, University of Toronto, Department of Economics.
    2. Xiao, Chaoqun & Tang, Wansheng & Zhao, Ruiqing & Zhou, Chi, 2013. "Equilibrium search with heterogeneous firms, workers and endogenous human capital," MPRA Paper 52136, University Library of Munich, Germany.
    3. Rasmus Lentz, 2014. "Optimal Employment Contracts with Hidden Search," NBER Working Papers 19988, National Bureau of Economic Research, Inc.

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