Firms' Training Decisions and Unemployment in Italian Labour Markets
Giornale degli Economisti e Annali di Economia, Vol. 61, No. 1, pp. 103-26, 2002
Posted: 29 Jan 2009
Date Written: January 27, 2009
Some recent theories of human capital investments show that firms could be interested in paying for the general training of their workers. However, when search costs are low because there is a large availability of skilled workers on the market (that is, when the skilled unemployment/vacancy ratio is high), firms might find it optimal to hire skilled workers on the market rather than provide training to inexperienced workers. In this paper, these aspects are studied through a model with search and matching frictions. In order to empirically verify the relationship between training and labour market tightness across Italian regions, we use, as exogenous determinants of unemployment, the regional differences in separation rates and in labour productivity (in face of a centralised wage bargaining system). Consistently with theoretical predictions, the evidence shows that training is negatively influenced by unemployment and turnover and positively by labour productivity.
Keywords: Training, Unemployment, Italian labour markets, Productivity differentials, Turnover
JEL Classification: J41, J24, J31
Suggested Citation: Suggested Citation