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Matching, Screening and Firm Investment in General Training: Theory and Evidence

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Author Info
Clark, Damon () (Nuffield College, Oxford)
Abstract

When job matching is important, we show that firms will pay for general training under very weak conditions. The key ingredient in our model is the idea that it is more costly to screen skilled workers than it is to screen unskilled ones. In equilibrium, this 'softens' competition for trained workers, allowing firms to recoup training investments. We apply our model to a classic case of firm investment in general training - German Apprenticeship Training - and show that a key prediction of our model that is not shared by other models is strongly supported in the data.

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Paper provided by International Conferences on Panel Data in its series 10th International Conference on Panel Data, Berlin, July 5-6, 2002 with number A2-4.

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Date of creation: Apr 2002
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Handle: RePEc:cpd:pd2002:a2-4

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Related research
Keywords: General Training; Human Capital; Auctions; Wages;

Find related papers by JEL classification:
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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  1. Dietmar Harhoff & Thomas J. Kane, 1993. "Financing Apprenticeship Training: Evidence from Germany," NBER Working Papers 4557, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Scoones, David, 2000. "Matching and competition for human capital," Labour Economics, Elsevier, vol. 7(2), pages 135-152, March. [Downloadable!] (restricted)
  3. Chang, Chun & Wang, Yijiang, 1996. "Human Capital Investment under Asymmetric Information: The Pigovian Conjecture Revisited," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 505-19, July. [Downloadable!] (restricted)
  4. Milgrom, Paul & Roberts, John, 1982. "Limit Pricing and Entry under Incomplete Information: An Equilibrium Analysis," Econometrica, Econometric Society, vol. 50(2), pages 443-59, March. [Downloadable!] (restricted)
  5. David Soskice, 1994. "Reconciling Markets and Institutions: The German Apprenticeship System," NBER Chapters, in: Training and the Private Sector, pages 25-60 National Bureau of Economic Research, Inc. [Downloadable!]
  6. McAfee, R. Preston & McMillan, John, 1987. "Auctions with entry," Economics Letters, Elsevier, vol. 23(4), pages 343-347. [Downloadable!] (restricted)
  7. Euwals, Rob & Winkelmann, Rainer, 2001. "Why do Firms Train? Empirical Evidence on the First Labour Market Outcomes of Graduate Apprentices," CEPR Discussion Papers 2880, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  8. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9. [Downloadable!] (restricted)
  9. Steven A. Matthews, 1995. "A Technical Primer on Auction Theory I: Independent Private Values," Discussion Papers 1096, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  10. Topel, Robert H & Ward, Michael P, 1992. "Job Mobility and the Careers of Young Men," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 439-79, May. [Downloadable!] (restricted)
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  11. Daron Acemoglu & Jörn-Steffen Pischke, 1998. "Why Do Firms Train? Theory And Evidence," The Quarterly Journal of Economics, MIT Press, vol. 113(1), pages 78-118, February. [Downloadable!] (restricted)
    Other versions:
  12. A. Werwatz, . "How firm-specific is German apprenticeship training?," Sonderforschungsbereich 373 1996-12, Humboldt Universitaet Berlin.
  13. David H. Autor, 2000. "Why Do Temporary Help Firms Provide Free General Skills Training?," NBER Working Papers 7637, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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