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A model of training policies in an imperfectly competitive labour market

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  • Giuseppe Croce

Abstract

The model developed in this paper highlights the structure of costs and benefits on which the decisions of investment in human capital by firms and workers depend under the hypothesis of imperfect labour markets. In this case, the wage after the training period remains below productivity. Several options of training policy are analysed through the model and their outcomes compared for what concerns the level of training and other outcomes. It is confirmed that a training subsidy financed by a tax on wage of trained workers does not determine the desired effects when labour market is imperfect. On the contrary, a subsidy can be effective if it is financed through profit taxation. Moreover, when workers’ union and employers bargain over wage of trained workers, a positive effect on the total number of trainees in the economy can arise.

Suggested Citation

  • Giuseppe Croce, 2005. "A model of training policies in an imperfectly competitive labour market," Working Papers in Public Economics 90, University of Rome La Sapienza, Department of Economics and Law.
    • Handle: RePEc:sap:wpaper:wp90
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