Why do firms invest in general training? - `good' firms and `bad' firms as a source of monopsony power (2000).

Content Provider	CiteSeerX
Author	Booth, Alison L. Zoega, Gylfi
Abstract	We develop a model demonstrating conditions under which firms will invest in the general training of their workers, and show that firms' incentives to invest in general training are increasing in task complexity. Workers' heterogeneous observable innate ability affects the variety of tasks that can be performed within a firm. This gives monopsony power to firms with `better' workforces. As a result such firms are willing to expend resources to provide workers with general training. Since the degree of monopsony power is increasing with task complexity, firms whose workforces undertake more sophisticated tasks are more willing to finance general training. We conclude that training will take place in better-than-average firms, while bad firms will have underperforming but overpaid workers that are not likely to be trained by their current employer. Keywords: Firm-financed general training, hierarchical assignment models, monopsony. JEL Classification: J24, J31, J42 * We should like to...
File Format	PDF
Publisher Date	2000-01-01
Access Restriction	Open
Subject Keyword	General Training Monopsony Power Firm Invest Task Complexity Current Employer Result Firm Bad Firm Hierarchical Assignment Model Heterogeneous Observable Innate Ability Firm-financed General Training Overpaid Worker Sophisticated Task Jel Classification Better-than-average Firm
Content Type	Text