Abstract: Training has been widely documented as an important way to increase labor productivity in the labor economic literature. This paper incorporates firm-specific training into a recent framework of search model developed by Helpman, Itskhoki and Redding (2010). It finds that more productive firms invest more on training, and pay higher wages to keep these well-trained workers. More productive firms invest relatively more on training skilled workers, and pay them relatively higher wages. Exporting increases training, wage and within-firm wage gap. Empirical evidence is also provided based on a firm-worker matched data set for Canada.