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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 frictions compress the structure of wages, firms may invest in the general skills of their employees. The reason is that the distortion 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 impact 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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File URL: http://dx.doi.org/10.1086/250071
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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
Contact details of provider: Web page: http://www.journals.uchicago.edu/JPE/

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