Discuss possible hold-up problems

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Reference no: EM13145481

Some firms hire employees for training periods. During this time the firm pays the workers low wages because the employee is not contributing to the profits of the firm. At the end of the training period the employee's wages go up substantially. Discuss the possible hold-up problems, importance of long term contracts, and possibility of underinvestment in labor that might occur under such compensation schemes.

Reference no: EM13145481

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