Barriers to Entry, Deregulation and Workplace Training

Andrea Bassanini and Giorgio Brunello

No 2746, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We develop a theoretical and empirical analysis of the impact of barriers to entry on workplace training. Our theoretical model yields ambiguous predictions on the sign of this relationship. On the one hand, given the number of firms, a deregulation reduces profits per unit of output, and thereby reduces training. On the other hand, the number of firms increases, and so does the output gain from training, which facilitates the investment in training. Our numerical simulation shows that for reasonable values of the parameters a negative relationship prevails. We use repeated cross section data from the European Labour Force Survey to investigate empirically the relationship between product market regulation and training incidence in a sample of 15 European countries and 13 industrial sectors, which we follow for about 7 years. Our empirical results are unambiguous and show that an increase in product market deregulation generates a sizeable increase in training incidence.

Keywords: training; product market competition; Europe (search for similar items in EconPapers)
JEL-codes: J24 L11 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2007-04
New Economics Papers: this item is included in nep-bec, nep-com, nep-eec and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Published - revised version published as 'Barriers to entry, deregulation and workplace training: A theoretical model with evidence from Europe' in: European Economic Review, 2011, 55 (8), 1152-1176

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Working Paper: Barriers to Entry, Deregulation and Workplace Training (2011)
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