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The Structure of Wages and Investment in General Training

  • Daron Acemoglu
  • Jorn-Steffen Pischke

In the standard model of human capital with perfect labor markets, workers pay for general training. When labor market feictions compress the structure of wages, firms may invest in the general skills of their employees. The reason is that the d istortion in the wage structure turns "technologically"general skills into "specific" skills. Labor market frictions and institutions, such as minimum wages and union wage setting, are crucial in shaping the wage structure, and thus have an important impa ct on training. Our results suggest that the more frictional and regulated labor markets in Europe and Japan may generate more firm-sponsored general training than the U.S.

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Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 107 (1999)
Issue (Month): 3 (June)
Pages: 539-572

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Handle: RePEc:ucp:jpolec:v:107:y:1999:i:3:p:539-572
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  1. Topel, Robert H & Ward, Michael P, 1992. "Job Mobility and the Careers of Young Men," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 439-79, May.
  2. Loewenstein, Mark A & Spletzer, James R, 1998. "Dividing the Costs and Returns to General Training," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 142-71, January.
  3. Sherwin Rosen, 1972. "Learning and Experience in the Labor Market," Journal of Human Resources, University of Wisconsin Press, vol. 7(3), pages 326-342.
  4. Lynch, Lisa M, 1992. "Private-Sector Training and the Earnings of Young Workers," American Economic Review, American Economic Association, vol. 82(1), pages 299-312, March.
  5. Duncan, Greg J & Stafford, Frank P, 1980. "Do Union Members Receive Compensating Wage Differentials?," American Economic Review, American Economic Association, vol. 70(3), pages 355-71, June.
  6. Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-62, October.
  7. John M. Barron & Mark C. Berger & Dan A. Black, 1997. "On-the-Job Training," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number ojt.
  8. Lindbeck, A. & Molander, P. & Persson, T. & Paterson, O. & Sandmo, A. & Swedenborg, B. & Thygesen, N., 1993. "Options for Economic and Political Reform in Sweden," Papers 540, Stockholm - International Economic Studies.
  9. Barron, John M & Fuess, Scott M, Jr & Loewenstein, Mark A, 1987. "Further Analysis of the Effect of Unions on Training [Union Wages, Temporary Layoffs, and Seniority]," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 632-40, June.
  10. John Bishop, 1994. "The Impact of Previous Training on Productivity and Wages," NBER Chapters, in: Training and the Private Sector: International Comparisons, pages 161-200 National Bureau of Economic Research, Inc.
  11. Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August.
  12. Booth, Alison L, 1991. "Job-Related Formal Training: Who Receives It and What Is It Worth?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 53(3), pages 281-94, August.
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