Do quits cause under-training?

A recent finding in the training literature is that there will be under-inv estment in skills if there is a positive quit rate, training is at least pa rtially transferable, and there is imperfect competition in the labour mark et. We explore the conditions under which this under-investment result migh t be reversed. In economies characterised by uncertainty about future produ ctivity, we show that a higher quit rate may increase the number of workers trained, by making firms wait less for information about future productivi ty before training new workers. At low quit rates, this offsets all of the under-investment effect.