General Training and Credit Constraints

The literature on firm-financed general training after Becker tried to explain the firmst incentive to invest in general training by looking at labour market ftictions. These friction were not only taken to explain the existence of firm-financed general training but were -- besides the workers' credit constraints -- made responsible for part of the inefficiency in the investment into general training. Although firms pay for general training, this paper confirms Becker's result that inefficient investment into general training can only arise ifworkers are credit constrained.