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Firms' Training Decisions and Unemployment in Italian Labour Markets

  • Maria De Paola

    ()

    (University of Calabria)

  • Vincenzo Scoppa

    ()

    (University of Calabria)

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.

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Article provided by GDE (Giornale degli Economisti e Annali di Economia), Bocconi University in its journal Giornale degli Economisti e Annali di Economia.

Volume (Year): 61 (2002)
Issue (Month): 1 (June)
Pages: 103-126

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Handle: RePEc:gde:journl:gde_v61_n1_p103-126
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