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Labour Contracts and Efficiency in On-the-Job Training

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  • Stevens, Margaret

Abstract

Two sources of inefficiency in the provision of on-the-job training are examined: an externality between firms which arises if there is imperfect competition between firms in the labor market, and allocation inefficiency due to asymmetry of information about the value of the trained worker. The second source of inefficiency may compound the first. Various contracts between the worker and the training firm are considered. Analysis of a simple example suggests that a contract in which the wage is chosen by the firm performs best, according to the criteria of reducing both types of inefficiency. Copyright 1994 by Royal Economic Society.

Suggested Citation

  • Stevens, Margaret, 1994. "Labour Contracts and Efficiency in On-the-Job Training," Economic Journal, Royal Economic Society, vol. 104(423), pages 408-419, March.
  • Handle: RePEc:ecj:econjl:v:104:y:1994:i:423:p:408-19
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    Cited by:

    1. Malcomson, James M. & Maw, James W. & McCormick, Barry, 2000. "General training by firms, apprentice contracts, and public policy," Discussion Paper Series In Economics And Econometrics 0021, Economics Division, School of Social Sciences, University of Southampton.
    2. Luis Garicano & Luis Rayo, 2017. "Relational Knowledge Transfers," American Economic Review, American Economic Association, vol. 107(9), pages 2695-2730, September.
    3. Christine Greenhalgh & George Mavrotas, 1996. "Job Training, New Technology and Labour Turnover," British Journal of Industrial Relations, London School of Economics, vol. 34(1), pages 131-150, March.
    4. Malcomson, James M. & Maw, James W. & McCormick, Barry, 2003. "General training by firms, apprentice contracts, and public policy," European Economic Review, Elsevier, vol. 47(2), pages 197-227, April.
    5. Statt, A.L., 1998. "Training and Displacement: is Employer Paid Training Firm-Specific?," Working Papers Series 9801, University of Stirling, Division of Economics.
    6. Kornelius Kraft & Julia Lang, 2013. "Profit Sharing and Training," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(6), pages 940-961, December.
    7. Daniel Dietz & Thomas Zwick, 2016. "The retention effect of training – portability, visibility, and credibility," Economics of Education Working Paper Series 0113, University of Zurich, Department of Business Administration (IBW).
    8. Chatterji, Monojit, 2008. "Training hold up and social labour markets," Labour Economics, Elsevier, vol. 15(2), pages 202-214, April.
    9. Statt, A.L., 1998. "Great Prospects: Employer Provided Training as a Credible Screening Device," Working Papers Series 9802, University of Stirling, Division of Economics.
    10. Stefania Zotteri, 2002. "Heterogeneity in Human Capital and Economic Growth," Temi di discussione (Economic working papers) 455, Bank of Italy, Economic Research and International Relations Area.
    11. Schlicht, Ekkehart, 1996. "Endogenous on-the-job training with moral hazard," Labour Economics, Elsevier, vol. 3(1), pages 81-92, August.
    12. Yanick Labrie & Claude Montmarquette, 2005. "La formation qualifiante et transférable en milieu de travail," CIRANO Project Reports 2005rp-04, CIRANO.
    13. Pablo Casas-Arce, 2004. "Firm Provision of General Training and Specific Human Capital Acquisition," Economics Series Working Papers 198, University of Oxford, Department of Economics.
    14. Klemperer, Paul, 1998. "Auctions with almost common values: The 'Wallet Game' and its applications," European Economic Review, Elsevier, vol. 42(3-5), pages 757-769, May.
    15. Conti, Gabriella, 2005. "Training, productivity and wages in Italy," Labour Economics, Elsevier, vol. 12(4), pages 557-576, August.

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