Arbeitspapier

Training, Job Security and Incentive Wages

This paper considers the optimal level of firm-specific training by taking into account the positive effect of training on the expected duration of workers' current employment. In the framework of an efficiency wage model, a short expected job tenure represents a disamenity that reduces the penalty from shirking. As this disamenity increases, workers have an incentive to continue providing a positive level of effort only if they are compensated by a higher wage. We endogenize the employment separation rate by introducing firm-specific training. Firm-specific training creates a rent that is lost if the worker is separated from the firm. As a result, the firm will be more reluctant to fire its trained workforce in a recession. This implies that firm-specific training can decrease current wages as it implies a credible commitment to lower future labour turnover.

Sprache
Englisch

Erschienen in
Series: CESifo Working Paper ; No. 955

Klassifikation
Wirtschaft
Thema
efficiency wages
firm-specific training

Ereignis
Geistige Schöpfung
(wer)
Katsimi, Margarita
Ereignis
Veröffentlichung
(wer)
Center for Economic Studies and ifo Institute (CESifo)
(wo)
Munich
(wann)
2003

Handle
Letzte Aktualisierung
10.03.2025, 11:44 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Katsimi, Margarita
  • Center for Economic Studies and ifo Institute (CESifo)

Entstanden

  • 2003

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