Accounting Firm in Silicon Valley has opportunity to train employee in Java (programming) and accounting law for 1 month Suppose that, at other firms in Silicon Valley, the training in accounting is considered completely useless (0 of potential productivity increase is used), but the Java training can be used up to its full potential (100 of potential productivity increase is used Worker Productivity without training $10'000 per month Employee's potential productivity increase from knowing Java is $4'000 Employee's potential productivity increase from accounting law is $6'000 Accounting firm doesn't benefit from full productivity increase from training Training teaches some material that is not fully useful to firm Java knowledge 40 of potential productivity increase is used at firm Accounting law knowledge 60 of potential productivity increase is used C F 5000 How much are the competitors willing to pay the employee (at most) What is the net value of training at the current firm Consider the following wage scheme w 1 6200, w 2 13800 Is either the firm or the worker held up (Neither,Both,The firm is held up,The employee is held up)

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Posted on Jul 08, 2024

Accounting Firm in Silicon Valley has opportunity to train employee in Java (programming) and accounting law for 1 month Suppose that, at other firms in

Accounting Firm in Silicon Valley has opportunity to train employee in Java (programming) and accounting law for 1 month

Suppose that, at other firms in Silicon Valley, the training in accounting is considered completely useless (0% of potential productivity increase is used), but the Java training can be used up to its full potential (100% of potential productivity increase is used.

Worker Productivity without training: $10'000 per month
Employee's potential productivity increase from knowing Java is $4'000
Employee's potential productivity increase from accounting law is $6'000
Accounting firm doesn't benefit from full productivity increase from training
Training teaches some material that is not fully useful to firm
Java knowledge: 40% of potential productivity increase is used at firm
Accounting law knowledge: 60% of potential productivity increase is used
C+F = 5000.

How much are the competitors willing to pay the employee (at most)?
What is the net value of training at the current firm?
Consider the following wage scheme: w₁=6200, w₂=13800. Is either the firm or the worker held-up? (Neither,Both,The firm is held-up,The employee is held-up)