TRAINING, TURNOVER, AND SEARCH

Elena Quercioli

International Economic Review, 2005, vol. 46, issue 1, 133-143

Abstract: This article explores a model of firm-specific training in a job search environment with labor turnover. The main substantive finding is a positive association between training and wages (when dispersed). The article then precisely characterizes how both wage dispersion and firm profitability depend on the flow value b > 0 of workers' unmatched time. It is shown that: (i) for all high values "b", no equilibrium exists; (ii) for intermediate values "b", multiple equilibria arise, where firms earn zero profits, and choose from a general wage distribution; (iii) for all lower values "b", there is a unique equilibrium, with firms earning positive profits, and choosing from an atomless set of wages. Copyright 2005 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.

Date: 2005
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