Firm-sponsored training and poaching externalities in regional labor markets

Regional Science and Urban Economics (Impact Factor: 1.01). 11/2011; 41(6):560-570. DOI: 10.1016/j.regsciurbeco.2011.04.003


A firm's decision to invest in the general human capital of its workers can be affected by labor market conditions. Firms located close to a large number of competitors might refrain from financing general training because skilled workers may be poached after completion of training. To better incorporate economic realities, we apply a novel definition of regional labor markets based on travel time rather than travel distance or political borders. Our results show that firms provide less training in dense regional labor markets, indicating that (potential) labor poaching affects the training behavior of firms. Moreover, the threat of poaching is relevant only if general training is financed by the employer.

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Available from: Samuel Muehlemann
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    • "As previous macro-level research suggest that regional training and labour markets differ in size, extension and accessibility, it is appropriate to include spatial measurements such as contiguities as well as commuting or travel time distances (e.g., Sforzi 2012; Heineck et al. 2011; Eckey et al. 2007). Muehlemann and Wolter (2011) for example find evidence for the influence of regional labour-market conditions on the willingness of employers to train only when regional labour markets are conceptualised on the basis of travel time, but not when taking political borders into account. Therefore, we integrate concepts of spatial analysis (e.g., Elhorst 2014; Anselin 1995) into a conventional analytical model. "
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    • "Research on the consequences of LH has focused on the spectrum on which the firm is positioned. A central premise of the literature is that the consequences are not confined to the recipient/destination firm, but also the originating firm (Muehlemann & Wolter, 2011). This includes the three parties to LH: target employee, current firm and outside firms (see Gardner et al., 2010). "
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