Replacing General Training with Specific Training: Why Restricting Alternatives Makes Sense

Posted: 9 Jul 1999

See all articles by John Barron

John Barron

Purdue University - Department of Economics

Mark Berger

University of Kentucky - Department of Economics

Dan Black

University of Chicago - Harris School of Public Policy

Abstract

This paper summarizes additional evidence indicating that much on-the-job training appears to be "specific" in that workers do not pay for such training in the form of lower starting wages. The paper then considers reasons why workers and firms might limit the portability of training. One rationale emerges in the context of a principal-agent model with firm moral hazard. A second rationale emerges in a model with financially-constrained workers. Our findings that individuals with higher education and more experience receive a higher proportion of training that is general is consistent with either the firm moral hazard model or financially-constrained worker model predictions concerning the optimal choice of the proportion of training that is specific.

JEL Classification: J0

Suggested Citation

Barron, John M. and Berger (deceased), Mark C. and Black, Dan, Replacing General Training with Specific Training: Why Restricting Alternatives Makes Sense. Research in Labor Economics, Vol. 18, 1999. Available at SSRN: https://ssrn.com/abstract=157597

John M. Barron (Contact Author)

Purdue University - Department of Economics ( email )

West Lafayette, IN 47907-1310
United States
765-494-4451 (Phone)
765-494-9658 (Fax)

Mark C. Berger (deceased)

University of Kentucky - Department of Economics

N/A

Dan Black

University of Chicago - Harris School of Public Policy ( email )

1155 East 60th Street
Chicago, IL 60637
United States

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