März 2016

IZA DP No. 9813: Does Less Wage Compression Lead to Less Training in Germany? An Expansion of Acemoglu and Pischke's Model of Training in Imperfect Labor Markets

We expand Acemoglu and Pischke's seminal model of training in imperfect labor markets by including the system of collective wage bargaining and the components of firms' training costs. Thus we can adapt their model to institutional changes that occurred since the 1990s. The model and the empirical developments we present show that firms compensate lower returns of apprenticeship training by changing training procedures towards more training at the work place and thus by decreasing net training costs. Therefore, more decentralized wage bargaining does not result in a reduction of firms' supply of training positions.