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Is firm-sponsored training a palliative? A common agency approach

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  • H. Lasram

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Didier G. Laussel

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

Abstract

We analyse the issue of firm-sponsored training under product market imperfections. In this setting, qualification becomes a public good for firms when their profits are increasing in the stock of skilled workers but remains a private good to students/workers. Students have to pay a tuition fee but at the same time firms sponsor education: universities sell training to both. We prove that the proportion of skilled workers is larger in more competitive economies/industries while the share of firms in the financing of training is a monotonically decreasing function of the degree of competition. An increase of the latter indeed increases the equilibrium skilled wage while reducing its sensitivity to an increase of the supply of skilled workers. The firms' aggregate expenditures on training per worker are nevertheless a nonmonotonic function of the competitiveness of the economy.

Suggested Citation

  • H. Lasram & Didier G. Laussel, 2016. "Is firm-sponsored training a palliative? A common agency approach," Post-Print hal-01448234, HAL.
    • Handle: RePEc:hal:journl:hal-01448234
    DOI: 10.1080/00036846.2016.1181830
    Note: View the original document on HAL open archive server: https://amu.hal.science/hal-01448234
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    References listed on IDEAS

    as
    1. David H. Autor, 2001. "Why Do Temporary Help Firms Provide Free General Skills Training?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(4), pages 1409-1448.
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    4. Bassanini, Andrea & Brunello, Giorgio, 2011. "Barriers to entry, deregulation and workplace training: A theoretical model with evidence from Europe," European Economic Review, Elsevier, vol. 55(8), pages 1152-1176.
    5. 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.
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    More about this item

    Keywords

    Education; Firm-sponsored training; Labour market; Product market imperfections;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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