Working Paper: CEPR ID: DP2845
Authors: Alison Booth; Gylfi Zoega
Abstract: It is well known that workers in Europe appear to receive more firm-provided general training than their counterparts in the United States. Moreover, there is considerable evidence that firms, in many cases, pay for the general training, contrary to the predictions of Becker (1964). In important recent contributions, Acemoglu and Pischke argue that it is through wage compression that unions and other labour-market institutions induce firms to invest in general training. We show that while wage compression can make firms more willing to pay for training, it does not constitute a necessary condition for firm-sponsored training.
Keywords: absolute wage compression; relative wage compression; firm-financed general training
JEL Codes: J24; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| wage compression (J31) | firms' willingness to pay for training (M53) |
| firms' willingness to pay for training (M53) | training investment (M53) |
| wage compression (J31) | training investment (M53) |
| wages < productivity (J31) | firms' investment in training (M53) |
| labor market institutions (J08) | training levels (M53) |
| wage compression (J31) | training levels (M53) |