Worker‐financed versus Firm‐sponsored Training: How are Skilled Workers Supplied to the Economy?

Naoki Shintoyo

Economica, 2010, vol. 77, issue 305, 110-127

Abstract: A search and matching model of general human capital is developed to contrast worker‐financed training with firm‐sponsored training, to evaluate which type of training might prevail in the economy. It will be shown that firm‐sponsored training is more likely to occur when there is greater friction in the labour market, whereas worker‐financed training prevails in a less frictional market. Moreover, the model has multiple equilibria in labour markets with intermediate friction. Comparative statistics exercises tell us that reductions in labour market friction result in less firm‐sponsored training in the economy, but encourage worker‐financed training.

Date: 2010
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