Firm Training and Wage Rigidity

Authors

• Lechthaler
• W.

Publication Date

JEL Classification

Key Words

Although wage rigidity is among the most prominent subjects in

modern economics, its effects on wage compression and firm training

have thus far not been considered.

 

This paper is trying to bridge this gap by using a simple two period

model which can still by analyzed analytically. I am able to show

that wage rigidity increases wage compression. 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.