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Training and Search On the Job

Rasmus Lentz, Nicolas Roys

NBER Working Paper No. 21702
Issued in November 2015
NBER Program(s):The Economic Fluctuations and Growth Program

The paper studies human capital accumulation over workers' careers in an on the job search setting with heterogenous firms. In renegotiation proof employment contracts, more productive firms provide more training. Both general and specific training induce higher wages within jobs, and with future employers, even conditional on the future employer type. Because matches do not internalize the specific capital loss from employer changes, specific human capital can be over-accumulated, more so in low type firms. While validating the Acemoglu and Pischke (1999) mechanisms, the analysis nevertheless arrives at the opposite conclusion: That increased labor market friction reduces training in equilibrium.

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Document Object Identifier (DOI): 10.3386/w21702

Published: Rasmus Lentz & Nicolas Roys, 2016. "Training and Search On the Job," Federal Reserve Bank of St. Louis, Working Papers, vol 2016(025).

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