Imperfect Information and Training Quality

Smits, Wendy, "Imperfect Information and Training Quality" . Labour, Vol. 19, No. 4, pp. 655-671, December 2005 Available at SSRN:

Abstract:

This paper develops a theoretical model in which the level of training provided by a firm is not observed by workers. It is therefore not possible to have training wages completely contingent upon the level of training provided. Training wages will be too high. This, in turn, prevents firms from recouping the full benefits from training and leads to underinvestment. The more general the training, the more severe this underinvestment problem.

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