The Structure of Wages and Investment in General Training
Journal of Political Economy, Vol. 107, No. 3, June 1999
Posted: 22 Sep 1999
There are 3 versions of this paper
The Structure of Wages and Investment in General Training
The Structure of Wages and Investment in General Training
Abstract
In the human capital model with perfect labor markets, firms never invest in general skills and all costs of general training are borne by workers. When labor market frictions compress the structure of wages, firms may pay for these investments. The distortion in the wage structure turns "technologically" general skills into de facto "specific" skills. Credit market imperfections are neither necessary nor sufficient for firm-sponsored training. Since labor market frictions and institutions shape the wage structure, they may have an important impact on the financing and amount of human capital investments and account for some international differences in training practices.
JEL Classification: J24, J31
Suggested Citation: Suggested Citation