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Firm-Specific Training

Author

Listed:
  • Leonardo Felli

    (Department of Economics, London School of Economics)

  • Christopher Harris

    (Department of Economics, Cambridge University)

Abstract

This paper introduces two complementary models of firm-specific training: an informational model and a productivity-enhancement model. In both models, market provision of firm-specific training is inefficient. However, the nature of the inefficiency depends on the balance between the two key components of training, namely productivity enhancement and employee evaluation. In the informational model, training results in a proportionate increase in productivity enhancement and employee evaluation, and training is underprovided by the market. In the productivity-enhancement model, training results in an increase in productivity enhancement but no change in employee evaluation, and training is overprovided by the market. In both models, turnover is inefficiently low.

Suggested Citation

  • Leonardo Felli & Christopher Harris, 2004. "Firm-Specific Training," Economics Working Papers 0038, Institute for Advanced Study, School of Social Science.
    • Handle: RePEc:ads:wpaper:0038
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    File URL: http://www.sss.ias.edu/publications/papers/econpaper38.pdf
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    References listed on IDEAS

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    Cited by:

    1. Garloff Alfred & Kuckulenz Anja, 2006. "Training, Mobility, and Wages: Specific Versus General Human Capital," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(1), pages 55-81, February.
    2. Gueorgui Kambourov & Iourii Manovskii, 2001. "Rising Occupational and Industry Mobility in the United States:1968-1993," PIER Working Paper Archive 04-012, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 05 Jul 2004.
    3. Th'eo Durandard, 2023. "Dynamic delegation in promotion contests," Papers 2308.05668, arXiv.org.

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    More about this item

    Keywords

    firm-specific training; productivity-enhancement; employee evaluation; components of training;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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