Acquiring Skills: Market Failures, Their Symptoms and Policy Responses

In recent years, technological change, unemployment and industrial restructuring have highlighted training and the acquisition of skills as a policy issue. Throughout the industrialized world there is widespread concern that employees are insufficiently skilled. This deficiency can have serious economic consequences: high unemployment, deficient growth, lagging competitiveness, insufficient innovation and deficient product quality. These problems are likely to become particularly urgent over the coming years, as the dramatic increase in the share of temporary and part-time employment in the OECD leads to a decline in incentives to train in the formal sectors. This book provides a systematic account of the causes, consequences and policy implications of failure in training provision and skills acquisition in the industrial world. Traditional human capital theory implies that the free market provides adequate incentives to train. This volume calls this conventional wisdom into question, arguing that since the markets for training are generally beset by imperfect competition and imperfect information, people generally do not receive adequate compensation for the training they acquire and provide. In a world where unemployment in concentrated among the unskilled workers, where productivity growth, innovation and product quality rest critically in the hands of skilled employees, and where skill shortages can lead to inflationary pressures, the issues addressed in this volume have become increasingly urgent and important.