The low skill trap

@inproceedings{Burdett2002TheLS,
  title={The low skill trap},
  author={Kenneth Burdett and Eric R. Smith},
  year={2002}
}
Recently, it has become popular to argue that certain workers have fallen into a trap in which they have poor skills, few job opportunities and a low return on training, while others have not. This paper demonstrates how such a trap can occur within a simple matching model with rent sharing. Rent sharing diminishes the worker's incentive to acquire skills; however, since firms also benefit from training, rent sharing likewise induces job creation. The subsequent improved matching prospects may… CONTINUE READING