The Effect of Tuition Reimbursement on Turnover: A Case Study Analysis

40 Pages Posted: 23 Mar 2007 Last revised: 12 Nov 2013

Date Written: March 2007

Abstract

Tuition reimbursement programs provide financial assistance for direct costs of education and are a type of general skills training program commonly offered by employers in the United States. Standard human capital theory argues that investment in firm-specific skills reduces turnover, while investment in general skills training could result in increased turnover. However, firms cite increased retention as a motivation for offering tuition reimbursement programs. This rationale for offering these programs challenges the predictions of the standard human capital model. This paper tests empirically whether participation in tuition reimbursement programs increases employee retention using data from a non-profit institution. To document the prevalence of tuition reimbursement programs, the case study analysis is supplemented with findings from the Survey of Employer-Provided Training, 1995 (SEPT95). This paper finds that participation in tuition reimbursement programs reduces employee turnover.

Suggested Citation

Manchester, Colleen Flaherty, The Effect of Tuition Reimbursement on Turnover: A Case Study Analysis (March 2007). NBER Working Paper No. w12975. Available at SSRN: https://ssrn.com/abstract=975917

Colleen Flaherty Manchester (Contact Author)

University of Minnesota ( email )

3-300R CarlSMgmt
Minneapolis, MN 55455
United States
612 625-9667 (Phone)

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