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On-the-Job Training and the Effects of Insider Power

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  • Diaz-Vazquez, Pilar

    ()
    (University of Santiago de Compostela, Spain)

  • Snower, Dennis J.

    ()
    (Kiel Institute for the World Economy)

Abstract

Suppose insiders use their market power to push up their wages, while entrants receive their reservation wages. How will employment and productivity be affected? In addressing this question, we focus on the role of on-the-job training. We show that on-the-job training makes insider wage hikes less detrimental to average employment (over booms and recessions), and may even cause employment to be stimulated. Furthermore, such training can make insider wage hikes more detrimental to average productivity.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 586.

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Length: 31 pages
Date of creation: Sep 2002
Date of revision:
Publication status: published in: Labour Economics, 2006, 13 (3), 317-341
Handle: RePEc:iza:izadps:dp586

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Related research

Keywords: insider power; employment; on-the-job training; productivity;

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References

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  1. Assar Lindbeck & Dennis J. Snower, 1989. "The Insider-Outsider Theory of Employment and Unemployment," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 026262074x, December.
  2. Assar Lindbeck & Dennis J. Snower, 2001. "Insiders versus Outsiders," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 15(1), pages 165-188, Winter.
  3. Gottfries, N. & Sjostrom, Y., 1998. "Insider Bargaining Power, Starting Wages, and Involuntary Unemployment," Papers, Uppsala - Working Paper Series 1998-10, Uppsala - Working Paper Series.
  4. Burda, Michael C, 1992. " A Note on Firing Costs and Severance Benefits in Equilibrium Unemployment," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 94(3), pages 479-89.
  5. Ernst Fehr & Georg Kirchsteiger, 2003. "Insider Power, Wage Discrimination, and Fairness," Labor and Demography, EconWPA 0305003, EconWPA.
  6. Vetter, Henrik & Andersen, Torben M, 1994. "Do Turnover Costs Protect Insiders?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 104(422), pages 124-30, January.
  7. Lazear, Edward P, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 105(3), pages 699-726, August.
  8. Pilar Díaz-Vázquez & Dennis J. Snower, 2003. "Can Insider Power Affect Employment?," German Economic Review, Verein für Socialpolitik, Verein für Socialpolitik, vol. 4(2), pages 139-150, 05.
  9. Frank, Jeff, 1985. "Trade Union Efficiency and Overemployment with Seniority Wage Scales," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 95(380), pages 1021-34, December.
  10. Bertola, Giuseppe, 1990. "Job security, employment and wages," European Economic Review, Elsevier, Elsevier, vol. 34(4), pages 851-879, June.
  11. Frank, Jeff & Malcomson, James M., 1994. "Trade unions and seniority employment rules," European Economic Review, Elsevier, Elsevier, vol. 38(8), pages 1595-1611, October.
  12. Díaz-Vázquez, Pilar & Snower, Dennis J., 2003. "Can insider power affect employment?," Open Access Publications from Kiel Institute for the World Economy, Kiel Institute for the World Economy (IfW) 2992, Kiel Institute for the World Economy (IfW).
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Cited by:
  1. Diaz-Vazquez, Pilar & Snower, Dennis J., 2004. "On-the-Job Training, Firing Costs and Employment," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4241, C.E.P.R. Discussion Papers.
  2. Pilar Díaz-Vázquez & Dennis J. Snower, 2003. "Can Insider Power Affect Employment?," German Economic Review, Verein für Socialpolitik, Verein für Socialpolitik, vol. 4(2), pages 139-150, 05.

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