Economics and Finance Faculty Publications and Presentations

Training, Turnover, and Search

Document Type

Article

Publication Date

2-2005

Abstract

This article explores a model of firm-specific training in a job search environment with labor turnover. The main substantive finding is a positive association between training and wages (when dispersed). The article then precisely characterizes how both wage dispersion and firm profitability depend on the flow value b≥ 0 of workers' unmatched time. It is shown that: (i) for all high values b, no equilibrium exists; (ii) for intermediate values b, multiple equilibria arise, where firms earn zero profits, and choose from a general wage distribution; (iii) for all lower values b, there is a unique equilibrium, with firms earning positive profits, and choosing from an atomless set of wages.

Comments

https://onlinelibrary.wiley.com/share/HBHBVVTN2QZSWBZ5NFZ6?target=10.1111/j.0020-6598.2005.00312.x

Publication Title

International Economic Review

DOI

https://doi.org/10.1111/j.0020-6598.2005.00312.x

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