Working Paper: CEPR ID: DP4879
Authors: Hans Gersbach; Armin Schmutzler
Abstract: We examine how globalization affects firms? incentives to provide general worker training. We consider a three-stage game. In stage 1, firms invest in productivity-enhancing training. In stage 2, they can make wage offers for each others? workers. Finally, Cournot competition takes place. When two product markets become integrated, that is, replaced by a market with greater demand and more firms, training by each firm increases, provided the two markets are sufficiently small. When barriers between large markets are eliminated, training is reduced. Integration increases welfare if it does not reduce training. However, for large parameter regions, welfare falls if integration reduces training. We also show that opening markets to countries with publicly funded training or cheap, low-skilled labour can threaten apprenticeship systems.
Keywords: General Worker Training; Globalization; Human Capital; Oligopoly; Turnover
JEL Codes: D42; L22; L43; L92
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Globalization (F60) | Increased Training Incentives (M53) |
| Globalization (F60) | Decreased Training Incentives (M53) |
| Training Equilibria Maintained (C62) | Welfare Effects (D69) |
| Training Equilibria Destroyed (D59) | Welfare Effects (D69) |
| Globalization (F60) | Threat to National Training Frameworks (F52) |