This paper investigates the conditions under which firms are willing to invest in the general human capital of their workers. We show that a key ingredient is the presence of labor market imperfections which distort the wage structure. In particular, firms will invest in training if the gap between productivity and wages is larger for more skilled workers. We outline a number of specific mechanisms which lead to a distorted equilibrium wage structure, and thus induce rms to invest in worker training. The predictions of our model differ from the standard Beckerian analysis of general human capital. We argue that a model with imperfect labor markets is more consistent with the empirical evidence on the financing of general training.

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This paper explores the nexus between work-related training and labour market "flexibility" (which we proxy by contract type, part-time employment, and lack of union coverage), using the first five waves of the British Household Panel Survey (BHPS) conducted over the period 1991-1995. Our results show that workers on short-term employment contracts, who are working part-time, or who are not covered by a union collective agreement, are significantly less likely to be involved in any work-related training to improve or increase their skills. These findings suggest that there is a trade-off between expanding the more marginal forms of employment, and expanding the proportion of the workforce getting work-related training. Keywords: Labour market flexibility, skills acquisition, work-related training, panel probits. JEL Classification: J24 * Paper presented at the British Association for the Advancement of Science Meetings (Economics Section) in Leeds, 10-11 September 1997, under the ti...

We argue that models of oligopsony or monopsonistic competition provide insights and explanation for many empirical phenomena in labor markets. Using a simple model with job differentiation and preference heterogeneity, we illustrate how such models can be employed to explain: the existence of wage dispersion, the persistence of labor market discrimination, market failures in the provision of training, and the anomalous employment effects of minimum wages. ∗The views expressed are not to be attributed to the Bureau of Labor Statistics or to the

Income and wage inequality increased rapidly in a number of OECD economies. This report surveys the literature on the determinants of wage and income inequality and presents a framework for analyzing policy. The focus is on human capital policies, but other policies that could also reduce income inequality are considered. The report concludes that increased income inequality in OECD economies reflects greater wage inequality and higher skill premia and that the most likely cause of the rise in skill premia is technical change that has increased the demand for skills and education, though changes in labor market institutions, such as minimum wage laws and the importance of union bargaining, are also likely to have played some role. Although increasing the supply of skills may have some beneficial effects, the most useful policies to reduce inequality would be those that can close the gap of skills between the top and the bottom of the income distribution, such as policies to improve the quality of secondary schooling and to encourage on-the-job training. Disclaimer: The views expressed are those of the author(s) and do not necessarily reflect the

We develop a model demonstrating conditions under which firms will invest in the general training of their workers, and show that firms ’ incentives to invest in general training are increasing in task complexity. Workers ’ heterogeneous observable innate ability affects the variety of tasks that can be performed within a firm. This gives monopsony power to firms with ‘better ’ workforces. As a result such firms are willing to expend resources to provide workers with general training. Since the degree of monopsony power is increasing with task complexity, firms whose workforces undertake more sophisticated tasks are more willing to finance general training. We conclude that training will take place in better-than-average firms while bad firms will have underperforming but overpaid workers that are not likely to be trained by their current employer. Keywords: Firm-financed general training, hierarchical assignment models, monopsony.

ABSTRACT. This paper presents an empirical analysis on the macroeconomic determinants of aggregate job-related training activity across fourteen OECD countries. Training data comes from the International Adult Literacy Survey. We find that compression at the bottom of the wage distribution has a positive effect on aggregate training across countries and agegroups while compression at the top has the opposite effect. Consistent with microeconomic evidence on education and training, average literacy skills in each country and age-group have a positive effect on the proportion of workers trained. The analysis controls for unemployment rates, R&D levels, unionization rates, and industrial structures. JEL Classification: J24; J31. Keywords: Job-Related Training; Wage Compression; Macroeconomic Evidence. RÉSUMÉ. Cet article présente une analyse empirique des déterminants macroéconomiques du niveau agrégé de formation reliée au travail dans quatorze pays de l’OCDE. Les données de formation proviennent de l’Enquête internationale sur l’alphabétisation des adultes. Nous démontrons que la compression au bas de la distribution des salaires a un effet positif sur la formation agrégée entre pays et groupes d’âge, alors que la compression au haut de la distribution

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We use British panel data to explore the returns to training incidence and intensity (duration) for 6924 employees. We find that the returns differ greatly depending on the nature of the training (general or specific); who funds the training (employee or employer); and the skill levels of the recipient (white or blue collar). Using decomposition analysis, we further conclude that training is positively associated with wage dispersion in Britain; with general training events (either funded by the employee or by their employer) creating a virtuous circle of wage gains for white-collar employees.

This article examines the attempt to revive apprenticeship training in Britain in the 1990s in the form of the Modern Apprenticeship. Drawing on historical and comparative examples, it puts this attempt into a broader context. The design and operation of the Modern Apprenticeship are assessed. While some optimistic conclusions are drawn, there are worries in terms of the quantity and quality of training under the initiative. The Modern Apprenticeship is seen as being probably the last opportunity in Britain to revive the employment-based route to initial training. This paper was produced as part of the Centre’s