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Training and Effort Dynamics in Apprenticeship

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  • Fudenberg, Drew
  • Rayo, Luis

Abstract

We study the design of careers by a principal who trains a cash-constrained agent, or apprentice, who is free to walk away at any time. The principal specifies time paths of knowledge transfer, effort provision, and task allocation, subject to the apprentice's continued participation. In the optimal contract, the apprentice pays for training by working for low or no wages and working inefficiently hard. The apprentice can work on both "skilled" (knowledge-complementary) and "unskilled" (knowledge-independent) tasks. If the principal specifies inefficiently much skilled effort at any time, she shortens the apprenticeship compared to its length when skilled effort is efficient. Otherwise, she specifies inefficiently much unskilled effort throughout and leaves the apprenticeship length unchanged. We then consider the effect of regulations that limit how hard the apprentice can work and how long the apprenticeship can last.

Suggested Citation

  • Fudenberg, Drew & Rayo, Luis, 2017. "Training and Effort Dynamics in Apprenticeship," CEPR Discussion Papers 12126, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12126
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    References listed on IDEAS

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    1. Daron Acemoglu & Jörn-Steffen Pischke, 1998. "Why Do Firms Train? Theory and Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 113(1), pages 79-119.
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    Cited by:

    1. Wei Zhao & Claudio Mezzetti & Ludovic Renou & Tristan Tomala, 2020. "Contracting over persistent information," Papers 2007.05983, arXiv.org, revised Oct 2020.
    2. Radoslawa Nikolowa & Daniel Ferreira, 2018. "How to Sell Jobs," Working Papers 846, Queen Mary University of London, School of Economics and Finance.
    3. Santiago Caicedo & Miguel Espinosa & Arthur Seibold, 2020. "Unwilling to Train? Firm Responses to the Colombian Apprenticeship Regulation," CESifo Working Paper Series 8598, CESifo.
    4. Grabiszewski, Konrad & Horenstein, Alex, 2020. "Effort is not a monotonic function of skills: Results from a global mobile experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 634-652.
    5. Santiago Caicedo & Arthur Seibold & Miguel Espinosa, 2019. "The Effects of Mandating Training in Firms: Theory and Evidence from the Colombian Apprenticeship Program," 2019 Meeting Papers 888, Society for Economic Dynamics.

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

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