This paper studies a possible market failure in the firm-based vocational training market: training may be too complex to be specified in a contract so that it is legally enforceable, resulting in the inability of firms to commit to training provision. We present a model of firm provided training and show that training is substantially lower in the no commitment than in the commitment case. Thus, firm-based vocational training schemes are more successful in countries where commitment to training provision is more widespread. (JEL J24, L25, M12, M53)
"What Makes Firm-Based Vocational Training Schemes Successful? The Role of Commitment."
American Economic Journal: Applied Economics,
Human Capital; Skills; Occupational Choice; Labor Productivity
Firm Performance: Size, Diversification, and Scope
Personnel Management; Executive Compensation
Personnel Economics: Training