Citation

Discussion Paper Details

Please find the details for DP2200 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Training, Rent-Sharing and Unions

Author(s): Alison L Booth, Marco Francesconi and Gylfi Zoega

Publication Date: August 1999

Keyword(s): General Training, Human Capital, Labour Unions and Quitting Externalities

Programme Area(s): Labour Economics

Abstract: We investigate two dimensions of investment in general human capital on-the-job: the number of workers trained and the intensity of training for each worker. In the benchmark case, we consider wage and training decisions made by firms in an imperfectly competitive labour market. The benchmark case generates two types of market failure: too few workers are trained, and the workers who are hired receive too little training. This is caused by the firms' discount rate exceeding the social discount rate, due to a 'quitting externality'. We show that the presence of labour unions can increase social welfare by increasing training intensity, while reducing welfare by lowering the number of workers trained. Using the British Household Panel Survey, we confirm the predictions of the model.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2200

Bibliographic Reference

Booth, A, Francesconi, M and Zoega, G. 1999. 'Training, Rent-Sharing and Unions'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2200