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Locus of Control and Investment in Training

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  • Caliendo, Marco

    (University of Potsdam)

  • Cobb-Clark, Deborah A.

    (University of Sydney)

  • Seitz, Helke

    (DIW Berlin)

  • Uhlendorff, Arne

    (CREST)

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

  • Caliendo, Marco & Cobb-Clark, Deborah A. & Seitz, Helke & Uhlendorff, Arne, 2016. "Locus of Control and Investment in Training," IZA Discussion Papers 10406, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp10406
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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

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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. David W. Johnston & Claryn S. J. Kung & Michael A. Shields, 2021. "Who is resilient in a time of crisis? The importance of financial and non‐financial resources," Health Economics, John Wiley & Sons, Ltd., vol. 30(12), pages 3051-3073, December.
    7. Fitzenberger, Bernd & Mena, Gary & Nimczik, Jan & Sunde, Uwe, 2019. "Personality Traits Across the Life Cycle: Disentangling Age, Period, and Cohort Effects," Rationality and Competition Discussion Paper Series 214, CRC TRR 190 Rationality and Competition.
    8. 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).
    9. Lafortune, Jeanne & Pugatch, Todd & Tessada, José & Ubfal, Diego, 2022. "Can Interactive Online Training Make High School Students More Entrepreneurial? Experimental Evidence from Rwanda," IZA Discussion Papers 15064, Institute of Labor Economics (IZA).
    10. 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.
    11. 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.
    12. 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).
    13. Bode, Eckhardt & Gold, Robert, 2018. "Adult training in the digital age," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 12, pages 1-14.
    14. 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).
    15. 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.
    16. 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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