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On the Information Gathering Role of Firm-Sponsored Training for New Hires

Author

Listed:
  • Doyoung Kim
  • Jacques Lawarree

Abstract

According to Becker´s human-capital theory, employers tend to underinvest in general training relative to specific training because it increases their existing employees´ outside opportunities. We show that this is not necessarily true if training has an information-gathering function that allows an agent to learn his skills. An example is the training of new hires. When training creates an information asymmetry between the principal and the agent, the principal may overinvest in general training relative to specific training. General training helps the principal reduce the incentive problem inside the firm. Becker´s result of underinvestment in general training may not hold when training creates asymmetric information.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Doyoung Kim & Jacques Lawarree, 2009. "On the Information Gathering Role of Firm-Sponsored Training for New Hires," Working Papers UWEC-2008-24-P, University of Washington, Department of Economics.
    • Handle: RePEc:udb:wpaper:uwec-2008-24-p
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    File URL: http://faculty.washington.edu/lawarree/Training-Lawarree-Kim.pdf
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    Cited by:

    1. Bing Ye & Sanxi Li, 2018. "Competitive contracts with productive information gathering," Journal of Economics, Springer, vol. 124(1), pages 1-17, May.

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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