Efficiency wages, labor heterogeneity and the fInancing of the training cost
AbstractWe consider a dual labor market with a continuum of heterogeneous workers differentiated by their ability of acquiring a specific skill. In the primary sector, jobs require firm-specific training and firms set efficiency wages. In the secondary sector, wages are competitive and no training is required. Given workers’ heterogeneity, firms in the primary sector face an elastic labor supply, so that they can be labor constrained at the efficiency wage. When this is the case, we show that firms may optimally choose to bear all the training cost in order to relax the labor supply constraint.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 1997072.
Date of creation: 01 Oct 1997
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dual labor markets; efficiency wages; training costs; workers’ heterogeneity; labor supply constraint;
Other versions of this item:
- Wauthy, Xavier & Zenou, Yves, 1997. "Efficiency Wages, Labor Heterogeneity and the Financing of the Training Cost," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1997022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
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