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Firms' Training Decisions and Unemployment in Italian Labour Markets

Author

Listed:
  • Maria De Paola

    () (University of Calabria)

  • Vincenzo Scoppa

    () (University of Calabria)

Abstract

Some recent theories of human capital investments show that firms could be interested in paying for the general training of their workers. However, when search costs are low because there is a large availability of skilled workers on the market (that is, when the skilled unemployment/vacancy ratio is high), firms might find it optimal to hire skilled workers on the market rather than provide training to inexperienced workers. In this paper, these aspects are studied through a model with search and matching frictions. In order to empirically verify the relationship between training and labour market tightness across Italian regions, we use, as exogenous determinants of unemployment, the regional differences in separation rates and in labour productivity (in face of a centralised wage bargaining system). Consistently with theoretical predictions, the evidence shows that training is negatively influenced by unemployment and turnover while labour productivity has a positive effect on it.

Suggested Citation

  • Maria De Paola & Vincenzo Scoppa, 2002. "Firms' Training Decisions and Unemployment in Italian Labour Markets," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 61(1), pages 103-126, June.
  • Handle: RePEc:gde:journl:gde_v61_n1_p103-126
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    References listed on IDEAS

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    More about this item

    Keywords

    training; unemployment; Italian labour markets; productivity differentials; turnover;

    JEL classification:

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

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