Discussion Paper Details

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Title: Is Wage Compression a Necessary Condition for Firm-Financed General Training?

Author(s): Alison L Booth and Gylfi Zoega

Publication Date: June 2001

Keyword(s): absolute- and relative wage compression and Firm-financed general training

Programme Area(s): Labour Economics

Abstract: It is well known that workers in Europe appear to receive more firm-provided general training than their counterparts in the United States. Moreover, there is considerable evidence that firms, in many cases, pay for the general training, contrary to the predictions of Becker (1964). In important recent contributions, Acemoglu and Pischke argue that it is through wage compression that unions and other labour-market institutions induce firms to invest in general training. We show that while wage compression can make firms more willing to pay for training, it does not constitute a necessary condition for firm-sponsored training.

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Bibliographic Reference

Booth, A and Zoega, G. 2001. 'Is Wage Compression a Necessary Condition for Firm-Financed General Training?'. London, Centre for Economic Policy Research.