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Risk preferences and training investments

Author

Listed:
  • Marco Caliendo

    (Director of Research at the Institute for the Study of Labor (IZA) in Bonn and affiliated with DIW Berlin and IAB - Director of Research at the Institute for the Study of Labor (IZA) in Bonn and affiliated with DIW Berlin and IAB)

  • Deborah Cobb-Clark
  • Cosima Obst
  • Arne Uhlendorff

    (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - Groupe ENSAE-ENSAI - Groupe des Écoles Nationales d'Économie et Statistique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - Groupe ENSAE-ENSAI - Groupe des Écoles Nationales d'Économie et Statistique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique)

Abstract

We analyze workers’ risk preferences and training investments. Our conceptual framework differentiates between the investment risk and insurance mechanisms underpinning training decisions. Investment risk leads risk-averse workers to train less; they undertake more training if it insures them against future losses. We use the German Socio-Economic Panel (SOEP) to demonstrate that risk affinity is associated with more training, implying that, on average, investment risks dominate the insurance benefits of training. Crucially, this relationship is evident only for general training; there is no relationship between risk attitudes and specific training. Thus, consistent with our conceptual framework, risk preferences matter more when skills are transferable – and workers have a vested interest in training outcomes – than when they are not. Finally, we provide evidence that the insurance benefits of training are concentrated among workers with uncertain employment relationships or limited access to public insurance schemes.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Marco Caliendo & Deborah Cobb-Clark & Cosima Obst & Arne Uhlendorff, 2023. "Risk preferences and training investments," Post-Print hal-04354608, HAL.
    • Handle: RePEc:hal:journl:hal-04354608
    DOI: 10.1016/j.jebo.2022.11.024
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    Cited by:

    1. Gong, Jindan & Xylia, Maria & Strambo, Claudia & Nykvist, Björn & Celik, Sirin, 2025. "What happened to the driver? Implications of electrification, digitalization, and automation on truck and taxi drivers," Technology in Society, Elsevier, vol. 81(C).
    2. Brosch, Hanna & Lergetporer, Philipp & Schoner, Florian, 2025. "Worker Beliefs about Firm Training," IZA Discussion Papers 18186, Institute of Labor Economics (IZA).
    3. Albanese, Mattia & Aliberti, Manfredi, 2024. "Workplace Training Unpacked: Labor Market Competition and Investment in General Skills," SocArXiv 4ugq5, Center for Open Science.
    4. Klauser, Roman & Tamm, Marcus, 2023. "Technological Change and Returns to Training," IZA Discussion Papers 16659, Institute of Labor Economics (IZA).
    5. Bachmann, Ronald & Klauser, Roman, 2024. "How do workers react to increased job loss fears? The role of training and job mobility," Ruhr Economic Papers 1137, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    6. Marco Caliendo & Deborah A. Cobb-Clark & Katrin Huber & Harald Pfeifer & Arne Uhlendorff & Sophie Wagner, 2025. "When Managers Choose: Gender Disparities in Employer Training Provision," CEPA Discussion Papers 90, Center for Economic Policy Analysis.
    7. Aisa, Rosa & Cabeza, Josefina & Martin, Jorge, 2023. "Automation and aging: The impact on older workers in the workforce," The Journal of the Economics of Ageing, Elsevier, vol. 26(C).
    8. Cosima Obst, 2022. "Job Satisfaction and Training Investments," CEPA Discussion Papers 47, Center for Economic Policy Analysis.
    9. Liu, Kui & Meng, Chuyan & Yang, Shasha & Zhang, Guanglu, 2024. "Air pollution and individual risk preference: Evidence from China," Energy Economics, Elsevier, vol. 136(C).
    10. Liu, Changyu & Gong, Wanrong & Dong, Guanglong & Ji, Qiang, 2024. "Regulation of environmental, social and governance disclosure greenwashing behaviors considering the risk preference of enterprises," Energy Economics, Elsevier, vol. 135(C).
    11. Innocenti, Stefania & Golin, Marta, 2022. "Human capital investment and perceived automation risks: Evidence from 16 countries," Journal of Economic Behavior & Organization, Elsevier, vol. 195(C), pages 27-41.
    12. Bratiloveanu Alexandra & Ignat Nicoleta Daniela & Croitoru Ionuț Marius, 2023. "Investment Risk – Bibliometric Analysis at the Level of EU States," Valahian Journal of Economic Studies, Sciendo, vol. 14(2), pages 23-38, December.

    More about this item

    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
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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