In this paper, we build a two-period model which focuses on On-the-Job training and derive the effects of specific training on wage profiles and on dismissals. The main results we obtain are as follows:
(i) Our two period wage-employment contract dominates the familiar repetitive spot contract in the environment of restricted information.
(ii) In this contract, the employees are not necessarily dismissed even if a business deficit is incurred.
(iii) In principle, greater amounts of specific training make wage profiles steeper and restrict dismissals.