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The Effects of Globalization on Worker Training

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Author Info

  • Gersbach, Hans

    ()
    (ETH Zurich)

  • Schmutzler, Armin

    ()
    (University of Zurich)

Abstract

We consider a three-stage game to examine how market integration affects firms’ incentives to provide general worker training. In stage 1, firms invest in productivity-enhancing training. In stage 2, they can make wage offers for each others’ workers. Finally, Cournot competition takes place. When two product markets become integrated, that is, replaced by a market with greater demand and more firms, training by each firm increases, provided the two markets are initially sufficiently concentrated. When barriers between less concentrated markets are eliminated, training is reduced. Integration increases welfare if it does not reduce training. However, for large parameter regions, welfare decreases if integration reduces training. We also show that opening product markets to countries with publicly funded training or cheap, low-skilled labor can threaten apprenticeship systems.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2403.

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Length: 42 pages
Date of creation: Oct 2006
Date of revision:
Handle: RePEc:iza:izadps:dp2403

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Keywords: oligopoly; human capital; general worker training; turnover; globalization;

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References

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  1. Gersbach, Hans & Schmutzler, Armin, 2001. "A Product Market Theory of Worker Training," IZA Discussion Papers 327, Institute for the Study of Labor (IZA).
  2. Euwals, Rob & Winkelmann, Rainer, 2001. "Why Do Firms Train? Empirical Evidence on the First Labour Market Outcomes of Graduated Apprentices," IZA Discussion Papers 319, Institute for the Study of Labor (IZA).
  3. Daron Acemoglu & Jorn-Steffen Pischke, 1998. "The Structure of Wages and Investment in General Training," NBER Working Papers 6357, National Bureau of Economic Research, Inc.
  4. Damon Clark & René Fahr, 2002. "The Promise of Workplace Training for Non-College Bound Youth: Theory and Evidence from German Apprenticeship," CEP Discussion Papers dp0518, Centre for Economic Performance, LSE.
  5. Daron Acemoglu & Jorn-Steffen Pischke, 1996. "Why Do Firms Train? Theory and Evidence," NBER Working Papers 5605, National Bureau of Economic Research, Inc.
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  7. Lars Vilhuber, 1999. "Sector-Specific Training and Mobility in Germany," CIRANO Working Papers 99s-03, CIRANO.
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Cited by:
  1. Axel Dreher & Jan-Egbert Sturm & Heinrich Ursprung, 2006. "The Impact of Globalization on the Composition of Government Expenditures: Evidence from Panel Data," CESifo Working Paper Series 1755, CESifo Group Munich.
  2. Andrea Bassanini & Giorgio Brunello, 2010. "Barriers to Entry, Deregulation and Workplace Training: A Theoretical Model with Evidence from Europe," CESifo Working Paper Series 2945, CESifo Group Munich.
  3. Samuel Muehlemann, 2013. "Der Einfluss der Internationalisierung auf die arbeitsmarktorientierte Bildung," Economics of Education Working Paper Series 0092, University of Zurich, Institute for Strategy and Business Economics (ISU).
  4. António B. Moniz & Margarida R. Paulos, 2008. "The globalisation in the clothing sector and its implications for work organisation: a view from the Portuguese case," IET Working Papers Series 05/2008, Universidade Nova de Lisboa, IET/CESNOVA-Research on Enterprise and Work Innovation, Faculty of Science and Technology.

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