Shared investment in general training : the role of information
The major premise of this paper is that potential recruiters do not possess much information on the extent and type of workers'on-the-job-training. Workers taken for trained might turn out to possess no, or very little, general training. Also, a worker recruited for a given job may possess the wrong type of general training. All this imposes substantial information-based costs on firms that recruit rather than train. These costs include opportunity costs, actual expenses and increased exposure to risk. As a result, a recruiting firm will offer lower wages and place a lower value on a recruited worker with general training than the firm that trained him.
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