Human Capital and Competition: Strategic Complementarities in Firm-based Training

Margaret Stevens ()

No 629, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: Vocational training systems differ markedly between countries. A model of firm-based human capital investment predicts equilibria characterised by particular patterns of training and job-to-job mobility, consistent with observed cross-country differences. Incentives to invest in human capital are determined jointly with labour turnover and the intensity of competition between employers for skilled workers, and the dependence of labour market conditions on human capital leads to strategic complementarity between training decisions. Depending on the extent of market frictions and match heterogeneity, we may expect to see either equilibria characterised by general training, steep wage profiles and high mobility; or equilibria in which both general and specific investment may occur, but turnover is low and wage profiles are relatively flat. Multiple equilibria are possible, in which case high turnover equilibria generate higher welfare.

Keywords: Human capital; labor turnover; specific training; general training; search; matching (search for similar items in EconPapers)
JEL-codes: J24 J63 (search for similar items in EconPapers)
Date: 2012-11-05
New Economics Papers: this item is included in nep-dge, nep-hrm, nep-knm and nep-lma
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Citations: View citations in EconPapers (1)

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