Job Training, Wage Growth, and Labor Turnover

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Using explicit information on timing and duration of job training in panels of PSID men, I find negative effects of training on turnover and positive effects on wage growth in the firm and over longer periods (1968 to 1983). Wages of trainees grow 4-6% faster per year over periods of training compared to other workers or periods. Wage trajectories in the firm and across firms over longer periods are steeper for workers who engage in more training. These results are explainable by a positive correlation between general and firm-specific components of training. So is the apparent paradox that frequent movers' wages grow less in the long run than those of less frequent movers (stayers), despite wage gains in moving. Mobility wage gains are reduced by worker investment in training in the new firm. These mobility (search and matching) gains appear to contribute to job attachment in the presence of such investments.

Published: Studies in Human Capital, E. Elger Publishing (1993)

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