Does Delegation Increase Worker Training?

27 Pages Posted: 22 Feb 2018

See all articles by Christos Bilanakos

Christos Bilanakos

Athens University of Economics and Business - Department of Management Science and Technology

John S. Heywood

University of Wisconsin at Milwaukee

John G. Sessions

University of Bath; IZA Institute of Labor Economics

Nikolaos Theodoropoulos

University of Cyprus

Date Written: April 2018

Abstract

We model a principal‐firm offering training to its agent‐worker under two alternative organizational structures: integration, where the principal retains authority to overrule the investment project recommended by the worker; and delegation, where the principal cannot overrule the worker's preferred investment project. We assume that training reduces the worker's effort cost of assembling information about alternative projects' payoffs and identify the conditions under which delegation increases the profit‐maximizing intensity of training. Empirical estimates from matched employer–employee data show that workplaces delegating authority do provide more worker training. This result persists in two cross sections, in panel fixed‐effect estimates and, critically, in an instrumental variable exercise that also controls for establishment fixed effects.

JEL Classification: D21, D22, D23, M53, M54

Suggested Citation

Bilanakos, Christos and Heywood, John S. and Sessions, John G. and Theodoropoulos, Nikolaos, Does Delegation Increase Worker Training? (April 2018). Economic Inquiry, Vol. 56, Issue 2, pp. 1089-1115, 2018, Available at SSRN: https://ssrn.com/abstract=3127886 or http://dx.doi.org/10.1111/ecin.12515

Christos Bilanakos (Contact Author)

Athens University of Economics and Business - Department of Management Science and Technology ( email )

Athens GR-11362
Greece

John S. Heywood

University of Wisconsin at Milwaukee ( email )

3210 N. Maryland Avenue, Bolton Hall 802
Bolton Hall 802
Milwaukee, WI 53211
United States
414-229-4437 (Phone)
414-229-3860 (Fax)

John G. Sessions

University of Bath ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

IZA Institute of Labor Economics

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

Nikolaos Theodoropoulos

University of Cyprus ( email )

CY-1678 Nicosia
Nicosia, Nicosia P.O. Box 2
Cyprus

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