Equilibrium Contracts and Firm-sponsored Training

Pontus Rendahl ()

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: This paper studies a model of firm-sponsored investments in general human capital. When institutional settings permit simple contractual arrangements that are consistent with at-will employment, firms invest in a worker's general skills. And when market forces discipline contracts, the equilibrium level of training intimately relates to any match-specific component of surplus, such as mobility costs. If these relation-specific components are sufficiently large, all externalities may be internalized, and training attains the social optimum. In marked contrast to the existing literature, these predictions do not rely on complementarities between training and rents (e.g. “wage-compression"), and they are independent of the distribution of profits and wages.

Keywords: Human capital; On-the-job training; Contracts and Reputations. (search for similar items in EconPapers)
JEL-codes: D21 J24 J41 M52 M53 (search for similar items in EconPapers)
Date: 2013-10-07
New Economics Papers: this item is included in nep-hrm and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:1336

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