Worker heterogeneity and general training

Worker heterogeneity can generate conditions under which firms will invest in the general training of their employees. A high ability worker raises the average level of talent in a firm and may consequently increase the range of tasks that can be performed within its ranks. In the absence of any countervailing worker power, some firms acquire monopsony power in the market for labour trained to do the more advanced tasks. Because the degree of monopsony power is increasing in task complexity, firms whose employees undertake more sophisticated tasks are more willing to finance general training. We conclude that training will take place in better-than-average or ‘good’ firms, while ‘bad’ firms will have low-ability workers unlikely to receive much training