Human capital investment and work incentives

• Autores: Matthias Kräkel
• Localización: Journal of Economics & Management Strategy, ISSN-e 1530-9134, Vol. 25, Nº. 3, 2016, págs. 627-651
• Idioma: inglés
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• Resumen

  • Traditional human capital theory based on the work by Gary Becker shows that firms do not invest in general human capital but offer firm-specific training that is only useful for the training firm. I extend the traditional approach by adding two natural assumptions—workers cannot be forced to acquire new knowledge, and they exert unobservable effort to produce valuable output for their employer. I show under which conditions firms do not offer firm-specific training but invest in general human capital, which increases the workers' outside option. This investment behavior is well in line with the documented prevalence of industry-specific and occupation-specific human capital over firm-specific human capital.