Do Quits Cause Under-Training?

Alison Booth and Gylfi Zoega

Oxford Economic Papers, 1999, vol. 51, issue 2, 374-86

Abstract: A recent finding in the training literature is that there will be underinvestment in skills if there is a positive quit rate, training is at least partially transferable, and there is imperfect competition in the labor market. The authors explore the conditions under which this underinvestment result might be reversed. In economies characterized by uncertainty about future productivity, they show that a higher quit rate may increase the number of workers trained by making firms wait less for information about future productivity before training new workers. At low quit rates, this offsets all of the underinvestment effect. Copyright 1999 by Royal Economic Society.

Date: 1999
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