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Market imperfections and firm-sponsored training

  • Picchio, Matteo
  • van Ours, Jan C

Recent human capital theories predict that labor market frictions and product market competition influence firm-sponsored training. Using matched worker-firm data from Dutch manufacturing, our paper empirically assesses the validity of these predictions. We find that a decrease in labor market frictions significantly reduces firms' training expenditures. Instead, product market competition does not have an effect on firm-sponsored training. We conclude that increasing competition through international integration and globalization does not pose a threat to investments in on-the-job training. An increase in labor market flexibility may reduce incentives of firms to invest in training, but the magnitude of this effect is small.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7881.

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Date of creation: Jun 2010
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Handle: RePEc:cpr:ceprdp:7881
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