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- Title
Firm-specific Training and Contract Length.
- Authors
Cantor, Richard
- Abstract
Wages subject to continuous renegotiation provide inefficient incentives for the creation of firm-specific human capital if training requires both firm investment and worker effort. Non-contingent career-long, fixed-wage contracts do not induce efficient levels of training because they award all the quasi-rents from training to the firm, leaving no incentive for trainee effort. Intermediate-length, fixed-wage contracts with known expiration dates can improve training incentives. During the life of the contract, all the quasi-rents accrue to the firm, but the trainee puts forth effort because he can appropriate future rents after the contract expires.
- Subjects
WAGES; HUMAN capital; EMPLOYEE training; LABOR contracts; LABOR economics
- Publication
Economica, 1990, Vol 57, Issue 225, p1
- ISSN
0013-0427
- Publication type
Article
- DOI
10.2307/2554077