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The Effects of Globalization on Worker Training

Author

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  • Gersbach, Hans

    () (ETH Zurich)

  • Schmutzler, Armin

    () (University of Zurich)

Abstract

We consider a three-stage game to examine how market integration affects firms’ incentives to provide general worker training. In stage 1, firms invest in productivity-enhancing training. In stage 2, they can make wage offers for each others’ workers. Finally, Cournot competition takes place. When two product markets become integrated, that is, replaced by a market with greater demand and more firms, training by each firm increases, provided the two markets are initially sufficiently concentrated. When barriers between less concentrated markets are eliminated, training is reduced. Integration increases welfare if it does not reduce training. However, for large parameter regions, welfare decreases if integration reduces training. We also show that opening product markets to countries with publicly funded training or cheap, low-skilled labor can threaten apprenticeship systems.

Suggested Citation

  • Gersbach, Hans & Schmutzler, Armin, 2006. "The Effects of Globalization on Worker Training," IZA Discussion Papers 2403, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp2403
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    Cited by:

    1. Moniz, António & Paulos, Margarida Ramires, 2008. "The globalisation in the clothing sector and its implications for work organisation: a view from the Portuguese case," MPRA Paper 10165, University Library of Munich, Germany.
    2. António B. Moniz & Margarida R. Paulos, 2009. "The clothing industry as a globalized sector: implications for work organisation, quality of work and job content," IET Working Papers Series 13/2009, Universidade Nova de Lisboa, IET/CICS.NOVA-Interdisciplinary Centre on Social Sciences, Faculty of Science and Technology.
    3. Axel Dreher & Jan-Egbert Sturm & Heinrich Ursprung, 2008. "The impact of globalization on the composition of government expenditures: Evidence from panel data," Public Choice, Springer, vol. 134(3), pages 263-292, March.
    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. Samuel Muehlemann, 2013. "Der Einfluss der Internationalisierung auf die arbeitsmarktorientierte Bildung," Economics of Education Working Paper Series 0092, University of Zurich, Department of Business Administration (IBW).

    More about this item

    Keywords

    oligopoly; human capital; general worker training; turnover; globalization;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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