NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Why Do Firms Train? Theory and Evidence

Daron Acemoglu, Jorn-Steffen Pischke

NBER Working Paper No. 5605
Issued in June 1996
NBER Program(s):   LS

This paper offers and tests a theory of training whereby workers do not pay for general training they receive. The crucial ingredient in our model is that the current employer has superior information about the worker's ability relative to other firms. This informational advantage gives the employer an ex post monopsony power over the worker which encourages the firm to provide training. We show that the model can lead to multiple equilibria. In one equilibrium quits are endogenously high, and as a result employers have limited monopsony power and are willing to supply only little training, while in another equilibrium quits are low and training high. We also derive predictions from our model not shared by other explanations of firm sponsored training. Using microdata from Germany, we show that the predictions of the specific human capital model are rejected, while our model receives support from the data.

download in pdf format
   (2475 K)

email paper

This paper is available as PDF (2475 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w5605

Published: Quarterly Journal of Economics, Vol. 113 (February 1998): 79-119. citation courtesy of

Users who downloaded this paper also downloaded these:
Acemoglu and Pischke w6740 Beyond Becker: Training in Imperfect Labor Markets
Acemoglu and Pischke w6357 The Structure of Wages and Investment in General Training
Acemoglu w7800 Technical Change, Inequality, and the Labor Market
Acemoglu and Pischke w7184 Minimum Wages and On-the-job Training
Acemoglu, Johnson, and Robinson w8460 Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us