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Training and Unions

Booth, Alison L and Chatterji, Monojit (1997) Training and Unions. Working Paper. C.E.P.R. Discussion Papers.

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Abstract

The paper examines the optimal level of training investment when trained workers are mobile, wage contracts are time-consistent, and training comprises both specific and general skills. It is shown that, in the absence of a social planner, the firm has ex-post monopsonistic power that drives trained workers' wages below the socially-optimal level. The emergence of trade union bargaining at the firm level can increase social welfare, however, by counterbalancing the firm's ex-post monopsonistic power in wage determination. Local union-firm wage bargaining ensures that the post-training wage is set sufficiently high to deter at least some quits, so that the number of workers the firm trains is nearer the socially-optimal number. The paper therefore sheds some light on the stylized facts that unions are associated with fewer quits and more firm-provided training.

Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Efficiency; Monopsony; Quits; Trade Unions; Training; Wages
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 18 Jul 2012 10:37
Last Modified: 18 Jul 2012 10:37
URI: http://repository.essex.ac.uk/id/eprint/3184

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