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Firm-sponsored Work-Related Training in Frictional Labour Markets: An empirical analysis for Switzerland

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  • Michael Gerfin

Abstract

Work-related training is considered to be very important for providing the workforce with the necessary skills for maintaining and enhancing the competitiveness of the firms and the economy. According to the classical human capital theory general training is entirely financed by workers. This prediction is at odds with the empirical evidence. This observation inspired new theoretical models with frictional labour markets aiming at explaining the empirical evidence. These frictions create incentives for firms to invest in general training. Most important from a policy point of view is that the amount of training in this frictional world is below the optimal first-best solution achieved in the classical human capital model. Instruments to increase investment in training depend on the dominating kind of friction. This paper tries to identify the sources of frictions in the Swiss labour market. The results indicate that internal wage guarantees (minimum wages set in labour contracts) may play an important role

Suggested Citation

  • Michael Gerfin, 2003. "Firm-sponsored Work-Related Training in Frictional Labour Markets: An empirical analysis for Switzerland," Diskussionsschriften dp0317, Universitaet Bern, Departement Volkswirtschaft.
  • Handle: RePEc:ube:dpvwib:dp0317
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    References listed on IDEAS

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    1. Loewenstein, Mark A & Spletzer, James R, 1998. "Dividing the Costs and Returns to General Training," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 142-171, January.
    2. Jörn-Steffen Pischke, 2001. "Continuous training in Germany," Journal of Population Economics, Springer;European Society for Population Economics, vol. 14(3), pages 523-548.
    3. Michael Gerfin, 2003. "Work-Related Training and Wages: An empirical analysis for male workers in Switzerland," Diskussionsschriften dp0316, Universitaet Bern, Departement Volkswirtschaft.
    4. 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.
    5. John M. Barron & Mark C. Berger & Dan A. Black, 1997. "On-the-Job Training," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number ojt, November.
    6. Alison L. Booth & Gylfi Zoega, 2004. "Is wage compression a necessary condition for firm-financed general training?," Oxford Economic Papers, Oxford University Press, vol. 56(1), pages 88-97, January.
    7. Goux, Dominique & Maurin, Eric, 2000. "Returns to firm-provided training: evidence from French worker-firm matched data1," Labour Economics, Elsevier, vol. 7(1), pages 1-19, January.
    8. Groot, Wim, 1995. "The Wage Effects of Investments in Enterprise-Related Training," Empirical Economics, Springer, vol. 20(1), pages 133-147.
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    Cited by:

    1. Michael Gerfin, 2003. "Work-Related Training and Wages: An empirical analysis for male workers in Switzerland," Diskussionsschriften dp0316, Universitaet Bern, Departement Volkswirtschaft.
    2. Andrea Bassanini, 2006. "Training, wages and employment security: an empirical analysis on European data," Applied Economics Letters, Taylor & Francis Journals, vol. 13(8), pages 523-527.
    3. Andrea Bassanini, 2006. "Training, wages and employment security," Post-Print halshs-00120488, HAL.

    More about this item

    Keywords

    Training; Wages; Market Imperfections; Mobility;

    JEL classification:

    • I2 - Health, Education, and Welfare - - Education
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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