Human Capital and Competition: Strategic Complementarities in Firm-based Training
AbstractVocational training systems differ markedly between countries. A model of firm-based human capital investment predicts equilibria characterised by particular patterns of training and job-to-job mobility, consistent with observed cross-country differences. Incentives to invest in human capital are determined jointly with labour turnover and the intensity of competition between employers for skilled workers, and the dependence of labour market conditions on human capital leads to strategic complementarity between training decisions. Depending on the extent of market frictions and match heterogeneity, we may expect to see either equilibria characterised by general training, steep wage profiles and high mobility; or equilibria in which both general and specific investment may occur, but turnover is low and wage profiles are relatively flat. Multiple equilibria are possible, in which case high turnover equilibria generate higher welfare. �
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 629.
Date of creation: 05 Nov 2012
Date of revision:
Human capital; labor turnover; specific training; general training; search; matching;
Find related papers by JEL classification:
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-03 (All new papers)
- NEP-DGE-2013-02-03 (Dynamic General Equilibrium)
- NEP-HRM-2013-02-03 (Human Capital & Human Resource Management)
- NEP-KNM-2013-02-03 (Knowledge Management & Knowledge Economy)
- NEP-LMA-2013-02-03 (Labor Markets - Supply, Demand, & Wages)
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