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General training by firms, apprentice contracts, and public policy

General training by firms, apprentice contracts, and public policy
General training by firms, apprentice contracts, and public policy
Workers will not pay for general on-the-job training if contracts are not enforceable. Firms may if there are mobility frictions. Private information about worker productivities, however, prevents workers who quit receiving their marginal products elsewhere. Their new employers then receive external benefits from their training. Training firms increase profits by offering apprenticeships committing them to high wages for trainees retained on completion. At those wages, only good workers are retained, which signals their productivity and reduces the external benefits if they subsequently quit. Regulation of apprenticeship length (a historically important feature) can enhance efficiency, as can appropriate subsidies.
21
University of Southampton
Malcomson, James M.
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Maw, James W.
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McCormick, Barry
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Malcomson, James M.
ebfa3cb7-df61-4a68-93e3-4f1882f7e9a8
Maw, James W.
9d6c29ff-bbe4-43da-b2bc-576ddb0971ef
McCormick, Barry
6030c745-bb61-4e93-ab8f-91e676281e08

Malcomson, James M., Maw, James W. and McCormick, Barry (2000) General training by firms, apprentice contracts, and public policy (Discussion Papers in Economics and Econometrics, 21) Southampton, UK. University of Southampton 47pp.

Record type: Monograph (Discussion Paper)

Abstract

Workers will not pay for general on-the-job training if contracts are not enforceable. Firms may if there are mobility frictions. Private information about worker productivities, however, prevents workers who quit receiving their marginal products elsewhere. Their new employers then receive external benefits from their training. Training firms increase profits by offering apprenticeships committing them to high wages for trainees retained on completion. At those wages, only good workers are retained, which signals their productivity and reduces the external benefits if they subsequently quit. Regulation of apprenticeship length (a historically important feature) can enhance efficiency, as can appropriate subsidies.

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Published date: 2000

Identifiers

Local EPrints ID: 33121
URI: https://eprints.soton.ac.uk/id/eprint/33121
PURE UUID: 74f6995d-0d14-4399-bbcf-9cb97e5a3890

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Date deposited: 19 Jul 2006
Last modified: 30 May 2018 16:31

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Contributors

Author: James M. Malcomson
Author: James W. Maw
Author: Barry McCormick

University divisions

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