The Effects of Globalization on Worker Training

Hans Gersbach and Armin Schmutzler

No 4879, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We examine how globalization affects firms? incentives to provide general worker training. We consider a three-stage game. In stage 1, firms invest in productivity-enhancing training. In stage 2, they can make wage offers for each others? workers. Finally, Cournot competition takes place. When two product markets become integrated, that is, replaced by a market with greater demand and more firms, training by each firm increases, provided the two markets are sufficiently small. When barriers between large markets are eliminated, training is reduced. Integration increases welfare if it does not reduce training. However, for large parameter regions, welfare falls if integration reduces training. We also show that opening markets to countries with publicly funded training or cheap, low-skilled labour can threaten apprenticeship systems.

Keywords: General worker training; Human capital; Oligopoly; Turnover; Globalization (search for similar items in EconPapers)
JEL-codes: D42 L22 L43 L92 (search for similar items in EconPapers)
Date: 2005-01
New Economics Papers: this item is included in nep-lab and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: The Effects of Globalization on Worker Training (2006)
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