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SIM, Seung-Gyu
Department Aoyama Gakuin University Department of International Economics, School of International Politics, Economics and Communication Position Professor |
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| Language | English |
| Publication Date | 2020/01 |
| Type | Academic Journal |
| Peer Review | Peer reviewed |
| Title | Back-loaded Wages and On-the-job Training in a Frictional Labor Market |
| Contribution Type | Single |
| Journal | Economic Inquiry |
| Journal Type | Another Country |
| Publisher | The Western Economic Association International |
| Volume, Issue, Page | 58(1),pp.386-400 |
| Author and coauthor | Seung-Gyu Sim |
| Details | This paper analyzes the coexistence of on-the-job (general) training and on-the-job search in a frictional labor market where firms post skill-dependent labor contracts to preemptively back-load compensation after training. The back-loaded compensation scheme discourages trained workers' efficient job-to-job transition, as if they accumulated relationship-specific capital, which induces over-intensified training among more productive firms. The quantitative analysis predicts that the market equilibrium, relative to the efficiency benchmark, gets more skilled workers (training inefficiency) and less output (allocation inefficiency). It further demonstrates that efficiency loss is moderate due to positive externality and can be improved, as search friction is mitigated. |