Training Costs and Wage Differentials in the Theory of Job Competition

Abstract

A labor market is considered that is characterized by job competition over job ladders. Firms paying more for comparable jobs can attract workers with better background characteristics (with general human capital) and will lose fewer trained workers (with general and firm-specific human capital). Optimizing behavior on the side of the firms gives rise to a wage structure that shows similar correlations between training and wages as would emerge in a human capital framework, but for different reasons. Further, the wage structure responds to other influences, like the degree of labor mobility.