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The Low-Skill, Bad-Job Trap
Author:
Mr. Alun H. Thomas
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Series:
IMF Working Papers
Volume/Issue:
Volume 1994: Issue 083
Language:
English
Publication Date:
01 Jul 1994
DOI:
https://doi.org/10.5089/9781451954524.001
ISBN:
9781451954524
ISSN:
1018-5941
Pages:
22
Keywords:
WP; market failure; training supply externality; vacancy supply externality; training function; wage-employment experience; job vacancy; earnings differential; vacancy decision; Skilled labor; Wages; Labor demand; Labor supply; Central and Eastern Europe; Europe
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The paper explains how a country can fall into a “low-skill, bad-job trap,” in which workers acquire insufficient training and firms provide insufficient skilled vacancies. In particular, the paper argues that in countries where a large proportion of the workforce is unskilled, firms have little incentive to provide good jobs (requiring high skills and providing high wages), and if few good jobs are available, workers have little incentive to acquire skills. In this context, the paper examines the need and effectiveness of training policy, and provides a possible explanation for why western countries have responded so differently to the broad-based shift in labor demand from unskilled to skilled labor.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund