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A MODEL OF GENERAL TRAINING, BANKING, AND LABOR TURNOVER
Author(s) -
Arvin B. Mak
Publication year - 1993
Publication title -
bulletin of economic research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.227
H-Index - 29
eISSN - 1467-8586
pISSN - 0307-3378
DOI - 10.1111/j.1467-8586.1993.tb00566.x
Subject(s) - economics , consumption (sociology) , consumption smoothing , labour economics , training (meteorology) , wage , general equilibrium theory , imperfect , human capital , microeconomics , quality (philosophy) , capital (architecture) , business cycle , macroeconomics , market economy , history , social science , linguistics , philosophy , physics , archaeology , epistemology , sociology , meteorology
Conventionally, models of general training assume perfect capital markets; as a result, workers smooth their consumption stream through borrowing. In these models general training has no effect on labor turnover. I develop a model of general training where workers have diminishing marginal utility from consumption, capital markets are imperfect, and a firm cannot monitor the match quality with another firm of a worker who quits. It is shown that in the absence of a surplus effect from training, raising the level of general training steepens the worker's wage profile for reasons associated with consumption smoothing and labor turnover. However, with the surplus effect, results may be ambiguous.