The primary focus of this monograph is on human capital investments, employment and bargaining at the level of the firm. The book provides coverage of well-established ideas in employment theory in relation to the human capital and the union bargaining literature together with developments that embrace important, though as yet sparsely researched, extensions. In particular, in this latter respect, it attempts the first summary of results that incorporate both human capital investment and employment decisions on the firm–union bargaining agenda. Emphasis is given to bargaining over investment costs and returns with respect to a team of workers. Microeconomics sections examine human capital in relation to labour demand and firm–union bargaining models as well as delineating between neoclassical and coalitional firms. Bargaining models embrace both efficient and sequential contracts. At the macroeconomic level, we investigate connections between, on the one hand, turnover costs and firm-specific human capital investments and, on the other, unemployment.

Throughout the text, two important human capital distinctions are emphasised. First, we differentiate between firm-specific and general human capital. Secondly, we delineate between models that concentrate on investment in the marginal worker and those that accommodate the fact that, in important instances, human capital investments are made with respect to teams, or groups, of workers.