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Does Poaching Distort Training?

  • Espen R. Moen
  • Asa Rosén

We analyse the efficiency of the labour market outcome in a competitive searchequilibrium model with endogenous turnover and endogenous general humancapital formation. We show that search frictions do not distort training decisionsif firms and their employees are able to coordinate efficiently, for instance, byusing long-term contracts. In the absence of efficient coordination devicesthere is too much turnover and too little investment in general training.Nonetheless, the number of training firms and the amount of training providedare constrained optimal, and training subsidies therefore reduce welfare. Copyright The Review of Economic Studies Limited, 2004.

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Article provided by Wiley Blackwell in its journal Review of Economic Studies.

Volume (Year): 71 (2004)
Issue (Month): 4 (October)
Pages: 1143-1162

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Handle: RePEc:bla:restud:v:71:y:2004:i:4:p:1143-1162
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