Journal Article The Free Rider Problem and a Social Custom Model of Trade Union Membership Get access Alison L. Booth Alison L. Booth The City University, London Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 100, Issue 1, February 1985, Pages 253–261, https://doi.org/10.2307/1885744 Published: 01 February 1985

This paper uses a survey of British graduates to estimate the impact of employer-provided training on the earnings of men and women graduates. The results indicate that, although the training impact is reduced after controlling for endogeneity, some forms of training have a considerable impact. However, there are substantial gender differences in the earnings impact of various typ es of training. Moreover, men graduates are more likely to receive training than otherwise identical women. Copyright 1993 by MIT Press.

Jobs with performance-related pay (PRP) attract workers of higher ability and induce workers to provide greater effort. The authors construct an integrated model of effort and sorting that clarifies the distinction between observable and unobservable ability and the relationship between earnings and productivity. Predictions are tested against data from the British Household Panel Survey. The PRP raises wages by 9 percent for men and 6 percent for women. Theoretical calculations show that these estimated earnings differentials represent average productivity differentials net of monitoring costs at the marginal firm using PRP but not of the disutility of additional effort expended by workers. Copyright 1999 by University of Chicago Press.

The negative effect of quits on the willingness of firms to provide on‐the‐job training is well documented in the theoretical literature. Here we explore the strength of this effect by solving a firm’s dynamic optimization problem where there is uncertainty about future productivity and nonzero firing costs. We find that the degree to which quit rates affect hiring depends on the ratio of firing to hiring costs. As this ratio rises, the negative effect of quits becomes less important, eventually reversing itself. We also describe how quit rates affect the firing decision. We highlight some testable implications of our analysis.

We confront the predictions of various theories with new training data from the British Household Panel Survey. We find that employer-financed training is associated with significantly higher wages at current and future firms, with a larger impact in future firms. This is consistent with human capital theory with credit constraints and with the new training literature assuming imperfectly competitive labor markets.