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Market Failures and the Under-Provision of Training

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  • Giorgio Brunello
  • Maria De Paola

Abstract

This paper reviews both the theoretical underpinnings and the empirical evidence in support of the under-provision of training. While there is little if any evidence in support of under-provision because of liquidity constraints to the demand side of the market, there is evidence that employers provide and pay for general training, and that the provision of skills encourages labor turnover. The combination of these two facts suggests that the labor market provides less training than optimal. The balance of the existing empirical evidence suggests that policy discussions should focus on the employer rather than on employees. Therefore, we conclude our review by discussing policies which affect the employer’ marginal benefits and marginal costs of training.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1286.

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Date of creation: 2004
Date of revision:
Handle: RePEc:ces:ceswps:_1286

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Keywords: training; efficiency; turnover;

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References

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Cited by:
  1. Bert Minne & Marc van der Steeg & Dinand Webbink, 2008. "Skill gaps in the EU: role for education and training policies," CPB Document, CPB Netherlands Bureau for Economic Policy Analysis 162, CPB Netherlands Bureau for Economic Policy Analysis.
  2. Sieben,Inge, 2005. "Does Training Trigger Turnover...or Not?," ROA Research Memorandum 008, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  3. Bassanini, Andrea & Booth, Alison L. & Brunello, Giorgio & De Paola, Maria & Leuven, Edwin, 2005. "Workplace Training in Europe," IZA Discussion Papers 1640, Institute for the Study of Labor (IZA).

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