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Market conditions and worker training: How does it affect and whom?

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  • Majumdar, Sumon

Abstract

This paper analyses the impact of labor market conditions on a firm's incentive to train its workers. In an equilibrium model of the labor market in which firms use both untrained and in-house trained workers, we show that the incidence of training increases with the tightness of the labor market. In a multi-sector framework, the usual threat of hold-up by a trained worker is more severe for workers who change their sector of work; during downturns, this serves to bias firms' incentives in imparting training away from such workers and towards workers already in the firm and those new workers coming from the same sector. Evidence from the NLSY confirms both predictions --- the incidence and duration of company-sponsored training is adversely affected by higher unemployment rates; furthermore, this negative effect is much stronger for workers who change industries as compared to those who do not.
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  • Majumdar, Sumon, 2007. "Market conditions and worker training: How does it affect and whom?," Labour Economics, Elsevier, vol. 14(1), pages 1-23, January.
    • Handle: RePEc:eee:labeco:v:14:y:2007:i:1:p:1-23
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    Cited by:

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    2. Dietz Daniel & Zwick Thomas, 2020. "Training in the Great Recession – Evidence from an Individual Perspective," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(4), pages 493-523, August.
    3. Francisca Bremberger & Rudolf Hochholzer & Peter Huber, 2016. "Labour Turnover, Employment Density and Employer Provided Training: Evidence from Vienna," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 2(1), pages 5-22.
    4. Bellmann Lutz & Gerner Hans-Dieter & Leber Ute, 2014. "Firm-Provided Training During the Great Recession," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(1), pages 5-22, February.
    5. Mikami, Satoru & Furukawa, Mitsuaki, 2014. "An Empirical Study of the Conditions for Successful Knowledge Transfer in Training Programs," Working Papers 85, JICA Research Institute.
    6. Lu Zhang & Xiaochao Guo & Zhimei Lei & Ming K. Lim, 2019. "Social Network Analysis of Sustainable Human Resource Management from the Employee Training’s Perspective," Sustainability, MDPI, vol. 11(2), pages 1-20, January.
    7. Samuel Muehlemann & Juerg Schweri & Rainer Winkelmann & Stefan C. Wolter, 2007. "An Empirical Analysis of the Decision to Train Apprentices," LABOUR, CEIS, vol. 21(3), pages 419-441, September.
    8. Harald Pfeifer & Uschi Backes-Gellner, 2017. "Another piece of the puzzle: Firms' investment in training as optimization of skills inventory," Economics of Education Working Paper Series 0136, University of Zurich, Department of Business Administration (IBW), revised Jun 2018.
    9. Francisca Bauer & Rudolf Hochholzer & Peter Huber, 2010. "Arbeitskräfteumschlag, Arbeitsmarktdichte und betriebliche Weiterbildung. Erste Ergebnisse anhand des Wiener Beschäftigungs- und Qualifizierungsmonitors," WIFO Working Papers 367, WIFO.
    10. Pedrini, Giulio & Cappiello, Giuseppe, 2022. "The impact of training on labour productivity in the European utilities sector: An empirical analysis," Utilities Policy, Elsevier, vol. 74(C).
    11. Mühlemann, Samuel & Wolter, Stefan C. & Wüest, Adrian, 2009. "Apprenticeship Training and the Business Cycle," IZA Discussion Papers 4460, Institute of Labor Economics (IZA).
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    13. Muehlemann, Samuel & Pfeifer, Harald & Walden, Günter & Wenzelmann, Felix & Wolter, Stefan C., 2010. "The financing of apprenticeship training in the light of labor market regulations," Labour Economics, Elsevier, vol. 17(5), pages 799-809, October.
    14. World Bank & National Research University – Higher School of Economics, 2013. "Developing Skills for Innovative Growth in the Russian Federation," World Bank Publications - Reports 16100, The World Bank Group.

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    More about this item

    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
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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