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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.

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

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    1. Alison L. Booth & Marco Francesconi & Gylfi Zoega, 2003. "Unions, Work-Related Training, and Wages: Evidence for British Men," ILR Review, Cornell University, ILR School, vol. 57(1), pages 68-91, October.
    2. Booth, Alison L & Francesconi, Marco & Zoega, Gylfi, 1999. "Training, Rent-Sharing and Unions," CEPR Discussion Papers 2200, C.E.P.R. Discussion Papers.
    3. Giuseppe Croce, 2004. "Verso una teoria non competitiva della formazione generale. Una rassegna degli sviluppi recenti nella letteratura del capitale umano," Rivista italiana degli economisti, Società editrice il Mulino, issue 1, pages 77-110.
    4. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1-9.
    5. Stevens, Margaret, 1999. "Human Capital Theory and UK Vocational Training Policy," Oxford Review of Economic Policy, Oxford University Press, vol. 15(1), pages 16-32, Spring.
    6. Booth, Alison L & Chatterji, Monojit, 1998. "Unions and Efficient Training," Economic Journal, Royal Economic Society, vol. 108(447), pages 328-343, March.
    7. Booth, Alison L. & Francesconi, Marco & Zoega, Gylfi, 2002. "Oligopsony, Institutions and the Efficiency of General Training," IZA Discussion Papers 618, Institute for the Study of Labor (IZA).
    8. Hart,Robert A. & Moutos,Thomas, 2008. "Human Capital, Employment and Bargaining," Cambridge Books, Cambridge University Press, number 9780521061032, May.
    9. Alan Manning & Ted To, 2002. "Oligopsony and Monopsonistic Competition in Labor Markets," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 155-174, Spring.
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