A Product-Market Theory of Industry-Specific Training

Hans Gersbach and Armin Schmutzler

No 610, SOI - Working Papers from Socioeconomic Institute - University of Zurich

Abstract: We develop a product market theory that explains why firms provide their workers with skills that are sufficiently general to be potentially useful for competitors. We consider a model where firms first decide whether to invest in industry-specific human capital, then make wage offers for each others� trained employees and finally engage in imperfect product market competition. Equilibria with and without training, and multiple equilibria can emerge. If competition is sufficiently soft and returns to the number of trained workers decrease sufficiently, firms may invest in non-specific training if others do the same, because they would otherwise suffer a competitive disadvantage or need to pay high wages in order to attract trained workers.

Keywords: industry-specific training; human capital; oligopoly; turnover (search for similar items in EconPapers)
JEL-codes: D42 L22 L43 L92 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2006-11
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 (23)

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Persistent link: https://EconPapers.repec.org/RePEc:soz:wpaper:0610

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