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Worker Reciprocity and Employer Investment in Training

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  • Edwin Leuven
  • Hessel Oosterbeek
  • Randolph Sloof
  • Chris van Klaveren

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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Bibliographic 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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Cited by:
  1. Florian Englmaier & Stephen G. Leider, 2008. "Contractual and Organizational Structurewith Reciprocal Agents," CESifo Working Paper Series 2415, CESifo Group Munich.
  2. Gerards, Ruud & de Grip, Andries & Witlox, Maaike, 2012. ""Employability-Miles" and Worker Employability Awareness," IZA Discussion Papers 6818, Institute for the Study of Labor (IZA).
  3. Sascha O. Becker & Dolores Messer & Stefan C. Wolter, 2011. "A Gift is not Always a Gift: Gift Exchange in a Voucher Experiment," CESifo Working Paper Series 3488, CESifo Group Munich.
  4. Nadège Marchand & Claude Montmarquette, 2008. "Training Without Certification :An Experimental Study," Post-Print halshs-00333521, HAL.
  5. Bilanakos, Christos, 2013. "Career concerns and firm – sponsored general training," Research in Economics, Elsevier, vol. 67(2), pages 117-132.
  6. Florian Englmaier & Stephen G. Leider, 2012. "Managerial Payoff and Gift Exchange in the Field," CESifo Working Paper Series 3707, CESifo Group Munich.
  7. Gerald Pruckner & Rupert Sausgruber, 2006. "A natural field experiment on newspaper purchasing," Natural Field Experiments 00320, The Field Experiments Website.
  8. Asplund, Rita, 2004. "The Provision and Effects of Company Training. A brief review of the literature," Discussion Papers 907, The Research Institute of the Finnish Economy.
  9. Rita Asplund, 2005. "The Provision and Effects of Company Training: A Brief Review of the Literature," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 31, pages 47-73.

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