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Locus of Control and Investment in Training

Listed author(s):
  • Caliendo, Marco

    ()

    (University of Potsdam)

  • Cobb-Clark, Deborah A.

    ()

    (University of Sydney)

  • Seitz, Helke

    ()

    (University of Potsdam)

  • Uhlendorff, Arne

    ()

    (CREST)

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.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10406.

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Length: 51 pages
Date of creation: Dec 2016
Handle: RePEc:iza:izadps:dp10406
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  2. Katharina Jaik & Stefan C. Wolter, 2016. "Lost in Transition: The Influence of Locus of Control on Delaying Educational Decisions," Economics of Education Working Paper Series 0118, University of Zurich, Department of Business Administration (IBW).
  3. Fouarge, Didier & Schils, Trudie & de Grip, Andries, 2010. "Why Do Low-Educated Workers Invest Less in Further Training?," IZA Discussion Papers 5180, Institute for the Study of Labor (IZA).
  4. Haelermans, Carla & Borghans, Lex, 2011. "Wage Effects of On-the-Job Training: A Meta-Analysis," IZA Discussion Papers 6077, Institute for the Study of Labor (IZA).
  5. Taehyun Ahn, 2013. "Locus of Control and Job Turnover," Working Papers 1405, Research Institute for Market Economy, Sogang University, revised 2014.
  6. Frauke H. Peter & Vaishali Zambre, 2016. "Intended College Enrollment and Educational Inequality: Do Students Lack Information?," Discussion Papers of DIW Berlin 1589, DIW Berlin, German Institute for Economic Research.
  7. Cobb-Clark, Deborah A. & Kassenboehmer, Sonja C. & Sinning, Mathias, 2013. "Locus of Control and Savings," IZA Discussion Papers 7837, Institute for the Study of Labor (IZA).
  8. Heineck, Guido & Anger, Silke, 2010. "The Returns to Cognitive Abilities and Personality Traits in Germany," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 535-546.
  9. Chang, Chun & Wang, Yijiang, 1996. "Human Capital Investment under Asymmetric Information: The Pigovian Conjecture Revisited," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 505-519, July.
  10. Acemoglu, Daron & Pischke, Jörn-Steffen, 1996. "Why do Firms Train? Theory and Evidence," CEPR Discussion Papers 1460, C.E.P.R. Discussion Papers.
  11. Kessler, Anke & Lülfesmann, Christoph, 2000. "The Theory of Human Capital Revisited: On the Interaction of General and Specific Investments," CEPR Discussion Papers 2533, C.E.P.R. Discussion Papers.
  12. 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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  16. Stevens, Margaret, 1994. "An Investment Model for the Supply of Training by Employers," Economic Journal, Royal Economic Society, vol. 104(424), pages 556-570, May.
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  19. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1-9.
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  21. Semykina, Anastasia & Linz, Susan J., 2007. "Gender differences in personality and earnings: Evidence from Russia," Journal of Economic Psychology, Elsevier, vol. 28(3), pages 387-410, June.
  22. Lynch, Lisa M, 1992. "Private-Sector Training and the Earnings of Young Workers," American Economic Review, American Economic Association, vol. 82(1), pages 299-312, March.
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  24. Lisa M. Lynch & Sandra E. Black, 1998. "Beyond the Incidence of Employer-Provided Training," ILR Review, Cornell University, ILR School, vol. 52(1), pages 64-81, October.
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  26. Andrew D. McGee, 2015. "How the Perception of Control Influences Unemployed Job Search," ILR Review, Cornell University, ILR School, vol. 68(1), pages 184-211, January.
  27. Edward P. Lazear, 2009. "Firm-Specific Human Capital: A Skill-Weights Approach," Journal of Political Economy, University of Chicago Press, vol. 117(5), pages 914-940, October.
  28. Wiswall, Matthew & Zafar, Basit, 2011. "Determinants of college major choice: identification using an information experiment," Staff Reports 500, Federal Reserve Bank of New York, revised 01 Aug 2014.
  29. Booth, Alison L & Zoega, Gylfi, 2000. "Why Do Firms Invest in General Training? 'Good' Firms and 'Bad' Firms as a Source of Monopsony Power," CEPR Discussion Papers 2536, C.E.P.R. Discussion Papers.
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  33. repec:eme:rlepps:v:18:y:1999:i:1999:p:303-330 is not listed on IDEAS
  34. Hashimoto, Masanori, 1981. "Firm-Specific Human Capital as a Shared Investment," American Economic Review, American Economic Association, vol. 71(3), pages 475-482, June.
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  36. Katz, Eliakim & Ziderman, Adrian, 1990. "Shared investment in general training : the role of information," Policy Research Working Paper Series 535, The World Bank.
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