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Firm training and wage rigidity

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  • Lechthaler, Wolfgang

Abstract

Although wage rigidity is among the most prominent subjects in modern economics, its effects on wage compression and firm training have thus far not been considered. This paper is trying to bridge this gap by using a simple two period model which can still by analyzed analytically. I am able to show that wage rigidity increases wage compression. However, contrary to previous work this is not sufficient to increase firms' training investments. The reason lies in the endogeneity of separations, which become more frequent.

Suggested Citation

  • Lechthaler, Wolfgang, 2008. "Firm training and wage rigidity," Kiel Working Papers 1452, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1452
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    More about this item

    Keywords

    Human capital; wage rigidity; training;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

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