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A Product-Market Theory of Industry-Specific Training

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Author Info

  • Hans Gersbach

    ()
    (CER-ETH - Center of Economic Research, ETH Zurich)

  • Armin Schmutzler

    ()
    (Socioeconomic Institute, University of Zurich)

Abstract

We develop a product market theory that explains why firms provide their workers with skills that are sufficiently general to be potentially useful for competitors. We consider a model where firms first decide whether to invest in industry-specific human capital, then make wage offers for each others’ trained employees and finally engage in imperfect product market competition. Equilibria with and without training, and multiple equilibria can emerge. If competition is sufficiently soft and returns to the number of trained workers decrease sufficiently, firms may invest in non-specific training if others do the same, because they would otherwise suffer a competitive disadvantage or need to pay high wages in order to attract trained workers.

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File URL: http://www.soi.uzh.ch/research/wp/2006/wp0610.pdf
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Bibliographic Info

Paper provided by Socioeconomic Institute - University of Zurich in its series SOI - Working Papers with number 0610.

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Length: 28 pages
Date of creation: Nov 2006
Date of revision:
Handle: RePEc:soz:wpaper:0610

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Keywords: industry-specific training; human capital; oligopoly; turnover;

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References

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  1. Alejandra Cattaneo & Sandra Hanslin & Rainer Winkelmann, 2007. "The Apple Falls Increasingly Far: Parent-Child Correlation in Schooling and the Growth of Post-Secondary Education in Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 143(II), pages 133-153, June.
  2. Dennis Gaertner & Daniel Halbheer, 2004. "Are There Waves in Merger Activity After All?," SOI - Working Papers 0414, Socioeconomic Institute - University of Zurich, revised Feb 2006.
  3. Lalive, Rafael & Schmutzler, Armin, 2005. "Competition for Railway Markets: The Case of Baden-Württemberg," CEPR Discussion Papers 5396, C.E.P.R. Discussion Papers.
  4. Hans Gersbach & Armin Schmutzler, 2011. "Foreign direct investment and R&D-offshoring," Oxford Economic Papers, Oxford University Press, vol. 63(1), pages 134-157, January.
  5. Gärtner, Dennis & Schmutzler, Armin, 2006. "Merger Negotiations and Ex-Post Regret," CEPR Discussion Papers 5911, C.E.P.R. Discussion Papers.
  6. Philippe Mahler & Rainer Winkelmann, 2005. "Single Motherhood and (Un)Equal EducationalOpportunities: Evidence for Germany," SOI - Working Papers 0512, Socioeconomic Institute - University of Zurich.
  7. Stefan Boes & Markus Lipp & Rainer Winkelmann, 2005. "Money Illusion Under Test," SOI - Working Papers 0514, Socioeconomic Institute - University of Zurich.
  8. Stefan Boes & Rainer Winkelmann, 2006. "The Effect of Income on Positive and Negative Subjective Well-Being," SOI - Working Papers 0605, Socioeconomic Institute - University of Zurich.
  9. Yves Schneider & Peter Zweifel, 2005. "Spatial Effects in Willingness-to-Pay: The Case of Two Nuclear Risks," SOI - Working Papers 0502, Socioeconomic Institute - University of Zurich, revised Sep 2007.
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