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What Makes Firm-Based Vocational Training Schemes Successful? The Role of Commitment

  • Christian Dustmann
  • Uta Sch�nberg

This paper studies a possible market failure in the firm-based vocational training market: training may be too complex to be specified in a contract so that it is legally enforceable, resulting in the inability of firms to commit to training provision. We present a model of firm provided training and show that training is substantially lower in the no commitment than in the commitment case. Thus, firm-based vocational training schemes are more successful in countries where commitment to training provision is more widespread. (JEL J24, L25, M12, M53)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/app.4.2.36
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File URL: http://www.aeaweb.org/aej/app/data/2010-0097_data.zip
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Article provided by American Economic Association in its journal American Economic Journal: Applied Economics.

Volume (Year): 4 (2012)
Issue (Month): 2 (April)
Pages: 36-61

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Handle: RePEc:aea:aejapp:v:4:y:2012:i:2:p:36-61
Note: DOI: 10.1257/app.4.2.36
Contact details of provider: Web page: https://www.aeaweb.org/aej-applied
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  1. Howard Gospel, 1998. "The Revival of Apprenticeship Training in Britain?," British Journal of Industrial Relations, London School of Economics, vol. 36(3), pages 435-457, 09.
  2. Acemoglu, D. & Pischki, J.S., 1996. "Why Do Firms Train? Theory and Evidence," Working papers 96-7, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Konings, Jozef & Vanormelingen, Stijn, 2009. "The Impact of Training on Productivity and Wages: Firm Level Evidence," CEPR Discussion Papers 7473, C.E.P.R. Discussion Papers.
  4. Paul Ryan, 2001. "The School-to-Work Transition: A Cross-National Perspective," Journal of Economic Literature, American Economic Association, vol. 39(1), pages 34-92, March.
  5. Stevens, Margaret, 1994. "An Investment Model for the Supply of Training by Employers," Economic Journal, Royal Economic Society, vol. 104(424), pages 556-70, May.
  6. Dustmann, Christian & Schönberg, Uta, 2004. "Training and Union Wages," IZA Discussion Papers 1435, Institute for the Study of Labor (IZA).
  7. Fitzenberger, Bernd & Kunze, Astrid, 2005. "Vocational Training and Gender: Wages and Occupational Mobility among Young Workers," IZA Discussion Papers 1766, Institute for the Study of Labor (IZA).
  8. Paul Ryan, 2001. "The School-to-Work Transition: A Cross-National Perspective: Corrigendum," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 767-767, September.
  9. Edward P. Lazear, 2009. "Firm-Specific Human Capital: A Skill-Weights Approach," Journal of Political Economy, University of Chicago Press, vol. 117(5), pages 914-940, October.
  10. David H. Autor, 2000. "Why Do Temporary Help Firms Provide Free General Skills Training?," NBER Working Papers 7637, National Bureau of Economic Research, Inc.
  11. Conti, Gabriella, 2005. "Training, productivity and wages in Italy," Labour Economics, Elsevier, vol. 12(4), pages 557-576, August.
  12. Paul Ryan & Howard Gospel & Paul Lewis, 2007. "Large Employers and Apprenticeship Training in Britain," British Journal of Industrial Relations, London School of Economics, vol. 45(1), pages 127-153, 03.
  13. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
  14. Rainer Winkelmann, 1997. "How young workers get their training: A survey of Germany versus the United States," Journal of Population Economics, Springer, vol. 10(2), pages 159-170.
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