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On-the-job training of new employees is often realised through the help of experienced workers. Considering the lack of verifiability of the human capital transmission process and the loss of insiders' bargaining power deriving from it, we examine some firms' hiring policies, based on family relationships, aimed to elicit the incumbent workforce's cooperation in training. We proceed by introducing...
This paper develops a dynamically consistent model of search, matching and bargaining when worker skills decline while unemployed. Long-term unemployment emerges as an endogenous phenomenon. Even with constant returns to matching, multiple Pareto rankable equilibria are possible. Policies to address long-term unemployment are best directed toward prevention (e.g. vacancy creation subsidies) rather...
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