Locus of Control and Investment in Training

51 Pages Posted: 19 Dec 2016

See all articles by Marco Caliendo

Marco Caliendo

University of Potsdam; Institute for the Study of Labor (IZA)

Deborah A. Cobb-Clark

School of Economics, University of Sydney; IZA Institute of Labor Economics

Helke Seitz

University of Potsdam

Arne Uhlendorff

IZA Institute of Labor Economics

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.

Keywords: human capital investment, on-the-job training, locus of control, wage expectations

JEL Classification: J24, C23, D84

Suggested Citation

Caliendo, Marco and Cobb-Clark, Deborah A. and Seitz, Helke and Uhlendorff, Arne, Locus of Control and Investment in Training. SOEPpaper No. 890; IZA Discussion Paper No. 10406. Available at SSRN: https://ssrn.com/abstract=2886777

Marco Caliendo (Contact Author)

University of Potsdam ( email )

August-Bebel Strasse 89
Potsdam, 14482
Germany
+49(0)331/9773225 (Phone)
+49(0)331/9773210 (Fax)

HOME PAGE: http://www.uni-potsdam.de/en/empwifo/news.html

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Deborah A. Cobb-Clark

School of Economics, University of Sydney ( email )

606 Social Sciences Bldg. (A02)
The University of Sydney
Sydney, NSW 2006
Australia
61435061387 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Helke Seitz

University of Potsdam

August-Bebel Strasse 89
Potsdam, 14482
Germany

Arne Uhlendorff

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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