Advanced Search
MyIDEAS: Login

Oligopsony, Institutions and the Efficiency of General Training

Contents:

Author Info

  • Booth, Alison L.

    ()
    (Australian National University)

  • Francesconi, Marco

    ()
    (University of Essex)

  • Zoega, Gylfi

    ()
    (Birkbeck College, University of London)

Abstract

In oligopsonistic labour markets, firms have some market power, and a wedge is created between wages and marginal product. When oligopsonistic firms' production technology requires generally trained workers, firms may therefore receive part of the returns to general training and be willing to pay for it despite its general nature. However this outcome is not efficient, in the sense that too few workers are trained and workers who are hired receive too little training. We consider how different institutions can affect this inefficiency. Industry-level minimum wages can remove the training inefficiency and provide workers with the right incentives to invest in general training. A training subsidy to firms can also be used to achieve first-best. Trade unions might also remedy the market failure, in two ways. First, if an industry-wide union has a direct say in the training decision and maximises the utility of a representative worker, it will choose the efficient level of training intensity. Second, firmspecific unions, through raising relative wages and reducing turnover, can increase training intensity.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://ftp.iza.org/dp618.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 618.

as in new window
Length: 36 pages
Date of creation: Oct 2002
Date of revision:
Publication status: published in: J. Messina, C. Michelacci, J. Turunen and G. Zoega (eds.), Proceedings of the 2004 ECB/CEPR Labour Market Workshop, Edward Elgar 2006
Handle: RePEc:iza:izadps:dp618

Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org

Order Information:
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Email:

Related research

Keywords: oligopsony; training; minimum wages; unions;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Daron Acemoglu & Jorn-Steffen Pischke, 1996. "Why Do Firms Train? Theory and Evidence," NBER Working Papers 5605, National Bureau of Economic Research, Inc.
  2. Booth, Alison L. & Francesconi, Marco & Zoega, Gylfi, 2003. "Unions, Work-Related Training, and Wages: Evidence for British Men," IZA Discussion Papers 737, Institute for the Study of Labor (IZA).
  3. Acemoglu, D. & Pischke, J.S., 1997. "The Structure of Wages and Investment in General Training," Working papers 97-24, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. James Malcomson & James W. Maw, 2002. "General Training by Firms, Apprentice Contracts, and Public Policy," Economics Series Working Papers 86, University of Oxford, Department of Economics.
  5. Barron, John M & Fuess, Scott M, Jr & Loewenstein, Mark A, 1987. "Further Analysis of the Effect of Unions on Training [Union Wages, Temporary Layoffs, and Seniority]," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 632-40, June.
  6. John M. Barron & Mark C. Berger & Dan A. Black, 1997. "On-the-Job Training," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number ojt.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Dustmann, Christian & Schönberg, Uta, 2004. "Training and Union Wages," IZA Discussion Papers 1435, Institute for the Study of Labor (IZA).
  2. Ericson, Thomas, 2004. "Personnel training: a theoretical and empirical review," Working Paper Series 2005:1, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  3. Booth, Alison L. & Francesconi, Marco & Zoega, Gylfi, 2003. "Unions, Work-Related Training, and Wages: Evidence for British Men," IZA Discussion Papers 737, Institute for the Study of Labor (IZA).
  4. Harald U. Pfeifer, 2008. "Train to gain – The benefits of employee-financed training in Germany," Economics of Education Working Paper Series 0037, University of Zurich, Institute for Strategy and Business Economics (ISU).
  5. Giuseppe Croce, 2005. "A model of training policies in an imperfectly competitive labour market," Working Papers 90, University of Rome La Sapienza, Department of Public Economics.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp618. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.