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Market imperfections and firm-sponsored training

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  • Matteo PICCHIO

    ()
    (Department of Economics, Tilburg University and IZA)

  • Jan C. VAN OURS

    ()
    (Department of Economics and CentER, Tilburg University, Department of Economics, University of Melbourne; IZA and CEPR)

Abstract

Recent human capital theories predict that labor market frictions and product market competition influence firm-sponsored training. Using matched worker-firm data from Dutch manufacturing, our paper empirically assesses the validity of these predictions. We find that a decrease in labor market frictions significantly reduces firms’ training expenditures. Instead, product market competition does not have an effect on firm-sponsored training. We conclude that increasing competition through international integration and globalization does not pose a threat to investments in on-the-job training. An increase in labor market flexibility may reduce incentives of firms to invest in training, but the magnitude of this effect is small.

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Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2010026.

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Length: 24
Date of creation: 16 Aug 2010
Date of revision:
Handle: RePEc:ctl:louvir:2010026

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Keywords: firm-sponsored training; labor market frictions; product market competition; matched worker-firm data;

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References

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Citations

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Cited by:
  1. Picchio, Matteo & van Ours, Jan C., 2011. "Retaining through Training: Even for Older Workers," IZA Discussion Papers 5591, Institute for the Study of Labor (IZA).
  2. Pontus Rendahl, 2013. "Equilibrium Contracts and Firm-sponsored Training," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 1336, Faculty of Economics, University of Cambridge.
  3. Mohrenweiser, Jens & Zwick, Thomas & Backes-Gellner, Uschi, 2013. "Poaching and firm-sponsored training: First clean evidence," ZEW Discussion Papers 13-037, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Katja Görlitz & Joel Stiebale, 2011. "The Impact of Product Market Competition on Employers’ Training Investments. Evidence from German Establishment Panel Data," De Economist, Springer, Springer, vol. 159(1), pages 1-23, March.
  5. Ritzen, Jo & Zimmermann, Klaus F., 2013. "A Vibrant European Labor Market with Full Employment," IZA Policy Papers, Institute for the Study of Labor (IZA) 73, Institute for the Study of Labor (IZA).

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