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The Interaction of Firing Costs and Firm Training

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  • Wolfgang Lechthaler

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Abstract

This paper analyzes the effects of firing costs in a broader setup than what is usually done, allowing for on-the-job training. By doing so the traditional analysis is extended with respect to two points: On the one hand firing costs clearly increase firm training because worker and firm are less likely to separate. On the other hand, firm training gives firms the opportunity to lower the costs of firing restrictions: After all the value of output of a well-trained worker is less likely to turn negative. Through these two channels firm training is able to diminish the negative effects of firing restrictions usually discussed in the literature.

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File URL: http://www1.vwa.unisg.ch/RePEc/usg/dp2006/DP01_Le.pdf
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Bibliographic Info

Paper provided by Department of Economics, University of St. Gallen in its series University of St. Gallen Department of Economics working paper series 2006 with number 2006-01.

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Length: 41 pages
Date of creation: Jan 2006
Date of revision:
Handle: RePEc:usg:dp2006:2006-01

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Keywords: Firm Training; Firing Costs; Human Capital;

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  17. David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027, December.
  18. Gerfin, Michael, 2004. "Work-Related Training and Wages: An Empirical Analysis for Male Workers in Switzerland," IZA Discussion Papers 1078, Institute for the Study of Labor (IZA).
  19. Wolfgang Lechthaler & Dennis J. Snower, 2006. "Minimum Wages and Firm Training," Kiel Working Papers 1298, Kiel Institute for the World Economy.
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Cited by:
  1. Pierre-Jean Messe & Benedicte Rouland, 2012. "Stricter employment protection and firms’ incentives to train: The case of French older workers," TEPP Working Paper 2012-04, TEPP.
  2. Lechthaler, Wolfgang & Snower, Dennis J., 2012. "Institutions and training inequality," European Journal of Political Economy, Elsevier, vol. 28(1), pages 88-104.

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