Large imbalances between the supply and demand for skills in transition economies are driven by rapid economic restructuring, misalignment of the education system with labor market needs, and underdeveloped adult education and training systems. The costs of mismatches can be large and...

We expand Acemoglu and Pischke's seminal model of training in imperfect labor markets by including the system of collective wage bargaining and the components of firms' training costs. Thus we can adapt their model to institutional changes that occurred since the 1990s. The model and the...