Several studies indicate that firms are reluctant to cut nominal wages during periods of relatively high nominal per capita GDP growth. It has been argued, however, that in an environment with a low nominal per capita GDP growth, i.e., when nominal wage cuts become customary, firms would no...

We develop a product market theory explaining why firms invest in general training of their workers and managers. We consider a model where firms first decide whether to invest in general human capital, then make wage offers for the trained employees in the market and finally engage in product...

No abstract.