Worker Reciprocity and Employer Investment in Training

Tinbergen Institute Discussion Paper No. 2002-090/3

19 Pages Posted: 27 Jan 2003

See all articles by Edwin Leuven

Edwin Leuven

University of Amsterdam - Faculty of Economics and Business (FEB); IZA Institute of Labor Economics

Hessel Oosterbeek

University of Amsterdam - Research Institute in Economics & Econometrics (RESAM); Tinbergen Institute Amsterdam (TIA); Institute for the Study of Labor (IZA)

Randolph Sloof

University of Amsterdam - Faculty of Economics & Business (FEB); Tinbergen Institute

Chris van Klaveren

University of Amsterdam - Faculty of Economics and Business (FEB)

Multiple version iconThere are 2 versions of this paper

Date Written: September 2002

Abstract

Standard economic theory predicts that firms will not invest in general training and will underinvest in specific training. Empirical evidence indicates, however, that firms do invest in general training of their workers and also points to no underinvestment in specific training. We propose a simple model in which a firm invests the socially optimal amounts in general and specific training if the worker is sufficiently motivated by reciprocity. A reciprocal worker may be willing to give the firm the full return on its investment. We present empirical evidence that is strongly supportive for the proposed mechanism. Workers with a high sensitivity to reciprocity have 15 percent higher training rates than workers with a low sensitivity to reciprocity.

Keywords: Training, Reciprocity

JEL Classification: J41

Suggested Citation

Leuven, Edwin and Oosterbeek, Hessel and Sloof, Randolph and Klaveren, Chris van, Worker Reciprocity and Employer Investment in Training (September 2002). Tinbergen Institute Discussion Paper No. 2002-090/3, Available at SSRN: https://ssrn.com/abstract=341441 or http://dx.doi.org/10.2139/ssrn.341441

Edwin Leuven (Contact Author)

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 5241 (Phone)
+31 20 525 4310 (Fax)

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Hessel Oosterbeek

University of Amsterdam - Research Institute in Economics & Econometrics (RESAM) ( email )

Roetersstraat 11
Amsterdam
Netherlands
+31 20 525 4242 (Phone)
+31 20 525 5283 (Fax)

HOME PAGE: http://www.fee.uva.nl/scholar/oosterbeek/

Tinbergen Institute Amsterdam (TIA)

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Institute for the Study of Labor (IZA)

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

Randolph Sloof

University of Amsterdam - Faculty of Economics & Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 5241 (Phone)
+31 20 525 4310 (Fax)

Tinbergen Institute ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

Chris van Klaveren

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

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