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Worker Reciprocity and Employer Investment in Training

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Author Info
Edwin Leuven
Hessel Oosterbeek
Randolph Sloof
Chris van Klaveren

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Abstract

Standard economic theory predicts that firms will not invest in general training and will underinvest in specific training. Empirical evidence, however, indicates that firms do invest in general training of their workers. Evidence from laboratory experiments points to less underinvestment in specific training than theory predicts. We propose a simple model in which a firm invests the socially optimal amounts in general and specific training if the worker is sufficiently motivated by reciprocity. A reciprocal worker may be willing to give the firm a full return on its investment. We present empirical evidence that supports the proposed mechanism. Workers with a high sensitivity to reciprocity have 15% higher training rates than workers with a low sensitivity to reciprocity. Copyright (c) The London School of Economics and Political Science 2005.

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Publisher Info
Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 72 (2005)
Issue (Month): 285 (02)
Pages: 137-149
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Handle: RePEc:bla:econom:v:72:y:2005:i:285:p:137-149

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  1. Gerald Pruckner & Rupert Sausgruber, 2006. "Trust on the Streets: A Natural Field Experiment on Newspaper Purchasing," Discussion Papers 06-01, University of Copenhagen. Department of Economics. [Downloadable!]
  2. Nadège Marchand & Claude Montmarquette, 2008. "Training Without Certification: An Experimental Study," CIRANO Working Papers 2008s-01, CIRANO. [Downloadable!]
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  3. Florian Englmaier & Stephen Leider, 2008. "Contractual and Organizational Structure with Reciprocal Agents," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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This page was last updated on 2009-11-22.


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