In period A, the VMP of all workers is $300, and workers are offered OJT (on-the-job training), which costs the firm $95 and does not harm their first-period productivity (i.e., workers productivity is their VMP in the first period regardless of whether they receive training). In period B, the VMP of trained workers is $400 and the VMP of untrained workers is $300 again. Suppose interest rate of 10%.

a. Suppose the training was general. If a worker were trained and it was a competitive labor market, what would be the first period and second period wages for such a worker?

b. Would workers choose to get training in this firm when the training is general? Why or why not?

c. Suppose the training was specific to the firm. If this were a competitive labor market, would the worker obtain training? Why or why not?