FIRM PROVISION OF GENERAL TRAINING AND SPECIFICHUMAN CAPITAL ACQUISITION

The existing literature on training is concerned with understanding the reasons whyfirms pay for the general skills of their workers, but without explaining which firmstrain which workers. This paper develops a theory that both explains the willingnessof firms to pay for general training, and accounts for the pattern of training provisionempirically observed. It is assumed that labor markets are perfectly competitive, butthere is imperfect contractibility of human capital. Under these assumptions, whentraining and specific human capital are complements, the firm would pay for the formerin order to induce the acquisition of complementary specific skills by the worker....