Employee Investment and Screening based on Labor Force Attachment

Atsuko Tanaka and Hsuan-chih Lin (linhc@econ.sinica.edu.tw)
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Hsuan-chih Lin: Academia Sinica

Economics Bulletin, 2020, vol. 40, issue 2, 1349-1356

Abstract: This paper studies firms' employee investment decisions based on labor force attachment under a screening model. We first characterize the conditions for pooling/separating equilibria and analyze the associated inefficiency. We find that strengthening the worker's labor force attachment does not always improve social welfare because it may lead to over-investment. The implications help us better understand the contributing factors to the gender wage gap since average job turnover rate is higher among women than men.

Keywords: Labor Force Attachment; Screening Mechanism; Wage Contracts; Employee Training (search for similar items in EconPapers)
JEL-codes: J3 J7 (search for similar items in EconPapers)
Date: 2020-05-15
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