General Training by Firms, Apprentice Contracts, and Public Policy

James Malcomson, James W. Maw and Barry McCormick

No 696, CESifo Working Paper Series from CESifo

Abstract: Workers will not pay for general on-the-job training if contracts are not enforceable. Firms may if there are mobility frictions. Private information about worker productivities, however, prevents workers who quit receiving their marginal products elsewhere. Their new employers then receive external benefits from their training. In this paper, training firms increase profits by offering apprenticeships which commit firms to high wages for those trainees retained on completion. At these high wages, only good workers are retained. This signals their productivity and reduces the external benefits if they subsequently quit. Regulation of apprenticeship length (a historically important feature) enhances efficiency. Appropriate subsidies enhance it further.

Keywords: general training; contract enforceability; apprenticeships; regulation (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)

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Related works:
Journal Article: General training by firms, apprentice contracts, and public policy (2003)
Working Paper: General Training by Firms, Apprentice Contracts, and Public Policy (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_696

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