Promotions, Multiskilling and Incentives for Skills∗

We study incentives for skill acquisition when skills cannot be contracted on. Our framework has two features. First, workers can acquire both firm specific and general skills at a cost, and second, job assignments signal skill acquisition to a less informed labor market. Our key insight is that each skill performs a different function. The firm specific skill helps in revealing information to a labor market whereas the general skill enforces wage promises from employers. As a consequence, both skills are acquired together in equilibrium, sometimes inefficiently. This endogenous complementarity between skills also yields implications for promotions and job design.