The Effects of Globalization on Worker Training

No 2403, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We consider a three-stage game to examine how market integration affects firms’ incentives to provide general worker training. In stage 1, firms invest in productivity-enhancing training. In stage 2, they can make wage offers for each others’ workers. Finally, Cournot competition takes place. When two product markets become integrated, that is, replaced by a market with greater demand and more firms, training by each firm increases, provided the two markets are initially sufficiently concentrated. When barriers between less concentrated markets are eliminated, training is reduced. Integration increases welfare if it does not reduce training. However, for large parameter regions, welfare decreases if integration reduces training. We also show that opening product markets to countries with publicly funded training or cheap, low-skilled labor can threaten apprenticeship systems.

Keywords: oligopoly; human capital; general worker training; turnover; globalization (search for similar items in EconPapers)
JEL-codes: D43 J24 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2006-10
New Economics Papers: this item is included in nep-lab and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: The Effects of Globalization on Worker Training (2005)
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