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Locus of Control and Investment in Training

Author

Listed:
  • Marco Caliendo
  • Deborah A. Cobb-Clark
  • Helke Seitz
  • Arne Uhlendorff

Abstract

This paper extends standard models of work-related training by explicitly incorporating workers' locus of control into the investment decision. Our model both differentiates between general and specific training and accounts for the role of workers and firms in training decisions. Workers with an internal locus of control are predicted to engage in more general training than are their external co-workers because their subjective expected investment returns are higher. In contrast, we expect little relationship between specific training and locus of control because training returns largely accrue to firms rather than workers. We then empirically test the predictions of our model using data from the German Socioeconomic Panel (SOEP). We find that, consistent with our model, locus of control is related to participation in general but not specific training. Moreover, we provide evidence that locus of control influences participation in general training through its effect on workers' expectations about future wage increases. Specifically, general training is associated with a much larger increase in the expected likelihood of receiving a future pay raise for those with an internal rather than external locus of control, while we do not find any relationship in the case of specific training. Actual post-training wages for those who receive general or specific training do not depend on locus of control.

Suggested Citation

  • Marco Caliendo & Deborah A. Cobb-Clark & Helke Seitz & Arne Uhlendorff, 2016. "Locus of Control and Investment in Training," SOEPpapers on Multidisciplinary Panel Data Research 890, DIW Berlin, The German Socio-Economic Panel (SOEP).
  • Handle: RePEc:diw:diwsop:diw_sp890
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    References listed on IDEAS

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    1. Locus of Control and Investment in Training
      by maximorossi in NEP-LTV blog on 2017-02-07 23:31:22

    Citations

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    2. Marco Caliendo & Juliane Hennecke, 2020. "Drinking is Different! Examining the Role of Locus of Control for Alcohol Consumption," CEPA Discussion Papers 18, Center for Economic Policy Analysis.
    3. Laible, Marie-Christine & Anger, Silke & Baumann, Martina, 2020. "Personality Traits and Further Training," IAB Discussion Paper 202034, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Sharma, Smriti & Tarp, Finn, 2018. "Does managerial personality matter? Evidence from firms in Vietnam," Journal of Economic Behavior & Organization, Elsevier, vol. 150(C), pages 432-445.
    5. Sauermann, Jan, 2015. "Worker Reciprocity and the Returns to Training: Evidence from a Field Experiment," IZA Discussion Papers 9179, Institute of Labor Economics (IZA).
    6. Malte Preuss & Juliane Hennecke, 2017. "Biased by Success and Failure: How Unemployment Shapes Stated Locus of Control," SOEPpapers on Multidisciplinary Panel Data Research 943, DIW Berlin, The German Socio-Economic Panel (SOEP).
    7. Johnston, David W. & Kung, Claryn S. J. & Shields, Michael A., 2020. "Who is Resilient in a Time of Crisis? The Importance of Financial and Non-Financial Resources," IZA Discussion Papers 13720, Institute of Labor Economics (IZA).
    8. Ruhose, Jens & Thomsen, Stephan L. & Weilage, Insa, 2019. "The benefits of adult learning: Work-related training, social capital, and earnings," Economics of Education Review, Elsevier, vol. 72(C), pages 166-186.
    9. Szabó-Morvai Ágnes & Hubert János Kiss, 2020. "Locus of control and Human Capital Investment Decisions: The Role of Effort, Parental Preferences and Financial Constraints," CERS-IE WORKING PAPERS 2055, Institute of Economics, Centre for Economic and Regional Studies.
    10. Caliendo, Marco & Cobb-Clark, Deborah A. & Hennecke, Juliane & Uhlendorff, Arne, 2019. "Locus of control and internal migration," Regional Science and Urban Economics, Elsevier, vol. 79(C).
    11. Bode, Eckhardt & Gold, Robert, 2018. "Adult training in the digital age," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 12, pages 1-14.
    12. Jens Ruhose & Stephan L. Thomsen & Insa Weilage, 2018. "The Wider Benefits of Adult Learning: Work-Related Training and Social Capital," SOEPpapers on Multidisciplinary Panel Data Research 1004, DIW Berlin, The German Socio-Economic Panel (SOEP).
    13. Marco Caliendo & Deborah A. Cobb-Clark & Cosima Obst & Arne Uhlendorff, 2020. "Risk Preferences and Training Investments," CEPA Discussion Papers 23, Center for Economic Policy Analysis.
    14. Ruhose, Jens & Thomsen, Stephan, 2017. "Non-Monetary Benefits of Continuous Training," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168169, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    Human Capital Investment; On-the-job Training; Locus of Control; Wage Expectations;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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