Quitting Externalities with Uncertainty about Future Productivity
This paper looks at the effect of quitting on the number of workers trained under conditions of uncertainty about future productivity when workers have both firm-specific and industry- specific skills. A new effect is found which works in the opposite direction of the undertraining result of Stevens (1994, 1995): A high quite rate makes investment in training less irreversible in the presence of firing costs and hence also less risky. this effect makes firms start hiring new workers at a lower level of productivity and hire more workers for a given increase in productivity. A rise in the quit rate can now either decrease or increase the number of trained workers.
Year of publication: |
2004-02-03
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Authors: | A, Booth ; G, Zoega |
Institutions: | ESRC Research Centre on Micro-Social Change, Institute for Social and Economic Research (ISER) |
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