The Theory of Human Capital Revisited: On the Interaction of General and Specific Investments

Anke Kessler and Christoph Lülfesmann

No 776, CESifo Working Paper Series from CESifo

Abstract: Human capital theory distinguishes between training in general-usage and firm-specific skills. In his seminal work, Becker (1964) argues that employers will not be willing to invest in general training when labor markets are competitive. However, they are willing to invest in specific training because it cannot be transferred to outside firms. The paper reconsiders Becker’s theory. We show that there exists an incentive complementarity between employersponsored general and specific investments: the possibility to provide specific training leads the employer to invest in general human capital. Conversely, the latter reduces the hold-up problem that arises with respect to the provision of firm-specific training. We also consider the virtues of long-term contracting and discuss some empirical observations that could be explained by the model.

Keywords: human capital formation; general and specific training; hold-up problem. (search for similar items in EconPapers)
JEL-codes: C78 D82 L14 L15 (search for similar items in EconPapers)
Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo_wp776.pdf (application/pdf)

Related works:
Journal Article: The Theory of Human Capital Revisited: on the Interaction of General and Specific Investments (2006)
Working Paper: The Theory of Human Capital Revisited: On the Interaction of General and Specific Investments (2000)
Working Paper: The Theory of Human Capital Revisited: On the Interaction of General and Specific Investments (2000)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_776

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().