Specific Training and Its Effects on the Human Capital Investment Profile

It is well known that investment in human capital is a mix of general and specific training.1 In the case of general training, the individual's investment raises his marginal product equally in all jobs which results in his paying for the entire investment. Part of an individual's investment in human capital, however, is specific to his 'current job and a fraction of the increase in his productivity that occurs on the current job is therefore not carried with him when he moves to another job. Thus the employer has an incentive to share the costs and returns of specific training with the worker in order to reduce the probability that the worker will quit. Most of the previous work on the human capital investment and earnings profiles has concentrated on the effects of general training and has shown that investment declines continuously over the life cycle due to the existence of a finite retirement age.2 Polachek 10 has shown, however, that this result is