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The Effects of Globalization on Worker Training

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  • 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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Citations

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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. Bassanini, Andrea & Brunello, Giorgio, 2011. "Barriers to entry, deregulation and workplace training: A theoretical model with evidence from Europe," European Economic Review, Elsevier, Elsevier, vol. 55(8), pages 1152-1176.
  3. Samuel Muehlemann, 2013. "Der Einfluss der Internationalisierung auf die arbeitsmarktorientierte Bildung," Economics of Education Working Paper Series, University of Zurich, Institute for Strategy and Business Economics (ISU) 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, Universidade Nova de Lisboa, IET/CESNOVA-Research on Enterprise and Work Innovation, Faculty of Science and Technology 05/2008, Universidade Nova de Lisboa, IET/CESNOVA-Research on Enterprise and Work Innovation, Faculty of Science and Technology.

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