Worker Reciprocity and Employer Investment in Training
AbstractStandard 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. See publication in Economica , 2005, 72(285), 137-149.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 02-090/3.
Date of creation: 23 Sep 2002
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- Edwin Leuven & Hessel Oosterbeek & Randolph Sloof & Chris van Klaveren, 2005. "Worker Reciprocity and Employer Investment in Training," Economica, London School of Economics and Political Science, vol. 72(285), pages 137-149, 02.
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
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