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General training by firms, apprentice contracts, and public policy

Malcomson, James M., Maw, James W. and McCormick, Barry (2003) General training by firms, apprentice contracts, and public policy European Economic Review, 47, (2), pp. 197-227. (doi:10.1016/S0014-2921(02)00207-6).

Record type: Article

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. In this paper, training firms increase profits by offering apprenticeships which commit firms to high wages for those trainees retained on completion. At these high wages, only good workers are retained. This signals their productivity and reduces the external benefits if they subsequently quit. Regulation of apprenticeship length (a historically important feature) enhances efficiency. Appropriate subsidies enhance it further.

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Published date: 2003
Keywords: general training, contract enforceability, apprenticeships, regulation

Identifiers

Local EPrints ID: 33374
URI: http://eprints.soton.ac.uk/id/eprint/33374
ISSN: 0014-2921
PURE UUID: fb9085f4-94a3-47cf-acaf-097fc18f819d

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Date deposited: 16 May 2006
Last modified: 17 Jul 2017 15:53

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Contributors

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

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