Who pays for job training?
This paper addresses a puzzle in the UK labour market. Why is not there enough investment in job training when there is a high skill premium? We model this as a coordination game between firms and workers. Using a social planning model as a baseline, the paper demonstrates that while it is socially beneficial to invest in job training, the private sector may fail to internalize these benefits in a wide range of economies. The chance of this coordination failure is greater in economies with a higher inequality in the skill distribution and a higher rate of time preference.Creation-Date: 2008-11
Authors: | Banerjee, Anurag ; Basu, Parantap |
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Institutions: | Centre for Dynamic Macroeconomic Analysis, University of St. Andrews |
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