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Journal Article

Downwards Wage Rigidity, Endogenous Separations and Firm Training

Bulletin of Economic Research

Authors

  • Lechthaler
  • W.

Publication Date

JEL Classification

J24 J31 M53

Key Words

Human Capital

training

Wage Rigidity

This paper analyzes the effect of downwards wage rigidity on wage setting, wage compression and firm training. It is shown that downwards wage rigidity in future periods induces a wage penalty and increases wage compression in the present period. However, contrary to previous work this is not sufficient to increase firms' training investments. The reason lies in the endogeneity of separations, which become more frequent.

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