Firms and workers may have conflicting interests with respect to the content of training programmes. On the basis of a model for the investment decision in industry-specific and generic training, I will show that, in the case of imperfect competition for industry-specific skills, workers want more generic training than is socially optimal because the level of generic training puts a lower bound on the wages workers will earn after completing the training, irrespective of whether they stay in the industry or move. Firms, on the other hand, want the generic component of the training to be as low as possible because it decreases their expected returns to industry-specific training. © 2006 Elsevier B.V. All rights reserved.
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