Asymmetric Information and the Provision of General Training

This paper considers a setting in which workers' relative abilities to form some skill differs with respect to two skills. When these abilities are unobservable, it is shown that a firm interested in only one of the skills nevertheless finds it useful to provide training opportunities for the other skill. Provision of this opportunity lowers the rent payments that have to be made to the worker more suited to the skill the firm is interested in. The analysis is used to explain the provision of training in general skills by firms intrinsically interested in some specific skill only