∗We wish to thank two anonymous referees and the Editor for valuable comments on earlier drafts.

Human capital theory distinguishes between training in general-usage and firm-specific skills. Becker (1964) argues that employers will only invest in specific training, not general train-ing, when labour markets are competitive. The paper reconsiders Becker’s theory. Using essentially his framework, we show that there exists an incentive complementarity between employer-sponsored general and specific training: the possibility to provide specific training leads the employer to invest in general human capital. Conversely, the latter reduces the hold-up problem that arises with firm-specific training. We also consider the desirability of institutionalized training programs and the virtues of breach penalties, and discuss some empirical facts that could be explained by the theory