Human Capital, Asymmetric Information and Labour-Management

Norman Ireland

Annals of Economics and Statistics, 1994, issue 33, 13-28

Abstract: We consider the employment relation within firms with reference to investment in human capital. Although the firm knows the future value of the worker's human capital to the worker, the worker only finds this out after the training is complete. Both moral hazard and adverse selection problems arise if the specificity of human capital, bestowed on the worker by the firm, is variable. The labour-managed firm is advanced as an institution that may be less prone to these problems. However, the more entrepreneurial the labour-managed firm, the less evident is the comparative advantage in providing training.

Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:adr:anecst:y:1994:i:33:p:13-28

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