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The low skill trap

Burdett, K and Smith, E (2002) 'The low skill trap.' European Economic Review, 46 (8). pp. 1439-1451. ISSN 0014-2921

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Recently, it has become popular to argue that certain workers have fallen into a trap in which they have poor skills, few job opportunities and a low return on training, while others have not. This paper demonstrates how such a trap can occur within a simple matching model with rent sharing. Rent sharing diminishes the worker's incentive to acquire skills; however, since firms also benefit from training, rent sharing likewise induces job creation. The subsequent improved matching prospects may offset the initial disincentive to invest. However, for this mechanism to be effective, firms and workers must coordinate their actions. If they do not, the trap occurs.

Item Type: Article
Uncontrolled Keywords: Search; Matching; Training; Multiple equilbria
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Economics, Department of
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 29 Jun 2012 12:32
Last Modified: 06 Jan 2022 13:30

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