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Firm Provision of General Training and Specific Human Capital Acquisition

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  • Pablo Casas-Arce

Abstract

The existing literature on training is concerned with understanding the reasons why firms pay for the general skills of their workers, but without explaining which firms train which workers. This paper develops a theory that both explains the willingness of firms to pay for general training, and accounts for the pattern of training provision empirically observed. It is assumed that labor markets are perfectly competitive, but there is imperfect contractibility of human capital. Under these assumptions, when training and specific human capital are complements, the firm would pay for the former in order to induce the acquisition of complementary specific skills by the worker.

Suggested Citation

  • Pablo Casas-Arce, 2004. "Firm Provision of General Training and Specific Human Capital Acquisition," Economics Series Working Papers 198, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:198
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    File URL: http://www.economics.ox.ac.uk/materials/working_papers/paper198.pdf
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    References listed on IDEAS

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    1. Daron Acemoglu & Jörn-Steffen Pischke, 1998. "Why Do Firms Train? Theory and Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 113(1), pages 79-119.
    2. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-1158, December.
    3. 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.
    4. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    5. David H. Autor, 2001. "Why Do Temporary Help Firms Provide Free General Skills Training?," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1409-1448.
    6. Stevens, Margaret, 1994. "Labour Contracts and Efficiency in On-the-Job Training," Economic Journal, Royal Economic Society, vol. 104(423), pages 408-419, March.
    7. Malcomson, James M. & Maw, James W. & McCormick, Barry, 2003. "General training by firms, apprentice contracts, and public policy," European Economic Review, Elsevier, vol. 47(2), pages 197-227, April.
    8. Acemoglu, Daron & Pischke, Jorn-Steffen, 1999. "Beyond Becker: Training in Imperfect Labour Markets," Economic Journal, Royal Economic Society, vol. 109(453), pages 112-142, February.
    9. Anke S. Kessler & Christoph Lülfesmann, 2006. "The Theory of Human Capital Revisited: on the Interaction of General and Specific Investments," Economic Journal, Royal Economic Society, vol. 116(514), pages 903-923, October.
    10. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-180, January.
    11. Canice Prendergast, 1993. "The Role of Promotion in Inducing Specific Human Capital Acquisition," The Quarterly Journal of Economics, Oxford University Press, vol. 108(2), pages 523-534.
    12. Mark A. Loewenstein & James R. Spletzer, 1999. "General and Specific Training: Evidence and Implications," Journal of Human Resources, University of Wisconsin Press, vol. 34(4), pages 710-733.
    13. Parent, Daniel, 1999. "Wages and Mobility: The Impact of Employer-Provided Training," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 298-317, April.
    14. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-990, October.
    15. Holmstrom, Bengt & Milgrom, Paul, 1994. "The Firm as an Incentive System," American Economic Review, American Economic Association, vol. 84(4), pages 972-991, September.
    16. Jovanovic, Boyan, 1979. "Firm-specific Capital and Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1246-1260, December.
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    Cited by:

    1. Giulio Pedrini, 2017. "Law and economics of training: a taxonomy of the main legal and institutional tools addressing suboptimal investments in human capital development," European Journal of Law and Economics, Springer, vol. 43(1), pages 83-105, February.
    2. Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
    3. Holger Görg & Eric Strobl, 2006. "Do Government Subsidies Stimulate Training Expenditure? Microeconometric Evidence from Plant-Level Data," Southern Economic Journal, Southern Economic Association, vol. 72(4), pages 860-876, April.
    4. Regula Geel & Uschi Backes-Gellner, 2009. "Occupational Mobility Within and Between Skill Clusters: An Empirical Analysis Based on the Skill-Weights Approach," Economics of Education Working Paper Series 0047, University of Zurich, Department of Business Administration (IBW).

    More about this item

    Keywords

    Training; Human Capital; Incomplete Contracts;

    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

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