In this paper I show that, contrary to Becker's (1962) Human Capital theory and consistent with the evidence, in a frictionless labor market model firms pay for general training, while the worker recives the full return on general training, and the worker and the firm share the returns on specific investments to underinvesttment in spacific trining because general and specific training are strtegic complements. I also show that these results are robust to long-term contracts and that several institutional arrangements that help to alleviate the underinvestment problem in specific training may also help to alleviate the underinvestment problem in general training.
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Paper provided by Centro de Economía Aplicada, Universidad de Chile in its series Documentos de Trabajo with number
137.
Length: Date of creation: 2002 Date of revision: Handle: RePEc:edj:ceauch:137
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