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Search Frictions, Credit Constraints and Firm Financed General Training

Author

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  • Christian Holzner

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Abstract

This paper shows that in a search model where future employers of trained workers do not benefit from the training in other firms, investment into general training will only be below the competitive level if workers are credit constrained. If workers are credit constrained, then the training firm cannot recover the cost of training since trained workers will search for a better paid job. This does, however, not imply that trainees will benefit from training. Only if the trainee wage is bounded by the workers' credit constraints do trainees gain from training.

Suggested Citation

  • Christian Holzner, 2005. "Search Frictions, Credit Constraints and Firm Financed General Training," ifo Working Paper Series 6, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
  • Handle: RePEc:ces:ifowps:_6
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    File URL: http://www.cesifo-group.de/DocDL/IfoWorkingPaper-6.pdf
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    References listed on IDEAS

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    1. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475, December.
    2. Daron Acemoglu & Jorn-Steffen Pischke, 1999. "The Structure of Wages and Investment in General Training," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 539-572, June.
    3. Stevens, Margaret, 2001. "Should Firms Be Required to Pay for Vocational Training?," Economic Journal, Royal Economic Society, vol. 111(473), pages 485-505, July.
    4. Daron Acemoglu, 1997. "Training and Innovation in an Imperfect Labour Market," Review of Economic Studies, Oxford University Press, vol. 64(3), pages 445-464.
    5. Stevens, Margaret, 1994. "An Investment Model for the Supply of Training by Employers," Economic Journal, Royal Economic Society, vol. 104(424), pages 556-570, May.
    6. Chang, Chun & Wang, Yijiang, 1996. "Human Capital Investment under Asymmetric Information: The Pigovian Conjecture Revisited," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 505-519, July.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Garloff Alfred & Kuckulenz Anja, 2006. "Training, Mobility, and Wages: Specific Versus General Human Capital," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(1), pages 55-81, February.
    2. Martin Werding, 2005. "Survivor Benefits and the Gender Tax-Gap in Public Pension Schemes Work Incentives and Options for Reform," ifo Working Paper Series 7, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.

    More about this item

    Keywords

    General training; credit constraints; search frictions; matching.;

    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
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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