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Market Imperfections and Firm-Sponsored Training

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  • Picchio, M.

    (Tilburg University, Center For Economic Research)

  • van Ours, J.C.

    (Tilburg University, Center For Economic Research)

Abstract

Recent human capital theories predict that labor market frictions and product market competition influence firm-sponsored training. Using matched worker-firm data from Dutch manufacturing, our paper empirically assesses the validity of these predictions. We find that a decrease in labor market frictions significantly reduces firms' training expenditures. Instead, product market competition does not have an effect on firm-sponsored training. We conclude that increasing competition through international integration and globalization does not pose a threat to investments in on-the-job training. An increase in labor market flexibility may reduce incentives of firms to invest in training, but the magnitude of this effect is small.
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Suggested Citation

  • Picchio, M. & van Ours, J.C., 2010. "Market Imperfections and Firm-Sponsored Training," Discussion Paper 2010-57, Tilburg University, Center for Economic Research.
    • Handle: RePEc:tiu:tiucen:81b2ea8b-3bb0-4c10-a87f-2fc23f26f6be
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    Cited by:

    1. Olga Kupets, 2018. "Employer‐provided training, innovation and skills in post‐Soviet countries," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(4), pages 725-768, October.
    2. 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.
    3. Belan, Pascal & Chéron, Arnaud, 2014. "Turbulence, training and unemployment," Labour Economics, Elsevier, vol. 27(C), pages 16-29.
    4. Bratti, Massimiliano & Conti, Maurizio & Sulis, Giovanni, 2019. "Employment Protection and Firm-provided Training: Quasi-experimental Evidence from a Labour Market Reform," GLO Discussion Paper Series 368, Global Labor Organization (GLO).
    5. Bratti, Massimiliano & Conti, Maurizio & Sulis, Giovanni, 2021. "Employment protection and firm-provided training in dual labour markets," Labour Economics, Elsevier, vol. 69(C).
    6. Mohrenweiser, Jens & Zwick, Thomas & Backes-Gellner, Uschi, 2013. "Poaching and firm-sponsored training: First clean evidence," ZEW Discussion Papers 13-037, ZEW - Leibniz Centre for European Economic Research.
    7. Rao, Neel, 2015. "General training in labor markets: Common value auctions with unobservable investment," Journal of Economic Behavior & Organization, Elsevier, vol. 120(C), pages 19-45.
    8. Daniela Sonedda, 2020. "Guess who's there: employment protection legislation and the degree of substitutability between labour contracts," IAAEU Discussion Papers 202007, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    9. Bilanakos, Christos & Heywood, John S. & Sessions, John & Theodoropoulos, Nikolaos, 2018. "Does demand for product quality increase worker training?," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 159-177.
    10. Oswald-Egg, Maria Esther & Siegenthaler, Michael, 2023. "Train drain? Access to foreign workers and firms’ provision of training," Labour Economics, Elsevier, vol. 85(C).
    11. Picchio, Matteo & van Ours, Jan C., 2016. "Gender and the effect of working hours on firm-sponsored training," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 192-211.
    12. Bolli, Thomas & Kemper, Johanna, 2015. "Evaluating the Impact of Employment Protection on Firm-Provided Training in an RDD Framework," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112895, Verein für Socialpolitik / German Economic Association.
    13. Picchio, Matteo & van Ours, Jan C., 2013. "Retaining through training even for older workers," Economics of Education Review, Elsevier, vol. 32(C), pages 29-48.
    14. Elisabetta Magnani, 2016. "Dissatisfaction with Working Time and Workers' Training Opportunities. Evidence from Matched Employer–Employee Data," Economic Papers, The Economic Society of Australia, vol. 35(2), pages 112-129, June.
    15. Tina Hinz & Jens Mohrenweiser, 2019. "Competition, Institutions and Company-sponsored Training," Economics of Education Working Paper Series 0162, University of Zurich, Department of Business Administration (IBW).
    16. Katja Görlitz & Joel Stiebale, 2011. "The Impact of Product Market Competition on Employers’ Training Investments. Evidence from German Establishment Panel Data," De Economist, Springer, vol. 159(1), pages 1-23, March.
    17. Bratti, Massimiliano & Conti, Maurizio & Sulis, Giovanni, 2018. "Employment Protection, Temporary Contracts and Firm-Provided Training: Evidence from Italy," IZA Discussion Papers 11339, Institute of Labor Economics (IZA).
    18. Emilio Colombo & Alberto Marcato, 2021. "Skill Demand and Labour Market Concentration: Theory and Evidence from Italian Vacancies," DISEIS - Quaderni del Dipartimento di Economia internazionale, delle istituzioni e dello sviluppo dis2104, Università Cattolica del Sacro Cuore, Dipartimento di Economia internazionale, delle istituzioni e dello sviluppo (DISEIS).
    19. Dan A. Black & Lars Skipper & Jeffrey A. Smith & Jeffrey Andrew Smith, 2023. "Firm Training," CESifo Working Paper Series 10268, CESifo.
    20. 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.
    21. Oswald-Egg, Maria Esther & Siegenthaler, Michael, 2023. "Train Drain? Access to Foreign Workers and Firms' Provision of Training," IZA Discussion Papers 15902, Institute of Labor Economics (IZA).
    22. Kupets, Olga, 2018. "Investment in human capital in post-Soviet countries: Why are firms not training more?," CEI Working Paper Series 2017-7, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    23. Gashi Ardiana & Adnett Nick J., 2024. "The Determinants of the Incidence of Employer-Provided Training in the Western Balkans," South East European Journal of Economics and Business, Sciendo, vol. 19(1), pages 113-122.
    24. Jo Ritzen & Klaus Zimmermann, 2014. "A vibrant European labor market with full employment," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-24, December.
    25. Tito Boeri & Jan van Ours, 2013. "The Economics of Imperfect Labor Markets: Second Edition," Economics Books, Princeton University Press, edition 1, number 10142.

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    More about this item

    Keywords

    firm-sponsored training; labor market frictions; product market competition; matched worker-firm data;
    All these keywords.

    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
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

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