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Provision of firm-sponsored training to temporary workers and labor market performance

Published online by Cambridge University Press:  18 April 2022

Makoto Masui
Makoto Masui*
Affiliation:
Soka University, Department of Economics E-mail: mmasui@soka.ac.jp
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Abstract

This paper addresses an employer’s decision to invest in firm-specific training for temporary workers within a search-matching framework with two-tier employment contracts. Based on the fact that opportunities to receive firm-provided training are significantly limited in temporary jobs, we examine whether policies aimed at inducing employers to provide training for temporary workers improve labor market performance. Our quantitative analysis produces the following results: first, reducing the cost of training temporary workers, which aims to directly increase their participation in firm-provided training, improves social efficiency but increases the unemployment rate, and decreases the share of permanent workers. Second, relaxing firing regulations on permanent jobs decreases the unemployment rate and increases the proportion of temporary workers who receive training and social welfare. Thus, a spillover effect of reforming employment protection legislation associated with permanent jobs is observed on training provision in temporary jobs.

Keywords

Firm-Specific TrainingTermination CostsTwo-Tier Employment Contracts
Type
Articles
Information
Macroeconomic Dynamics , Volume 27 , Issue 4 , June 2023 , pp. 966 - 997
Copyright
© The Author(s), 2022. Published by Cambridge University Press

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