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Training and Effort Dynamics in Apprenticeship

Drew Fudenberg and Luis Rayo

American Economic Review, 2019, vol. 109, issue 11, 3780-3812

Abstract: A principal specifies time paths of effort provision, task allocation, and knowledge transfer for a cash-constrained apprentice, who is free to walk away at any time. In the optimal contract the apprentice pays for training by working for low or no wages and by working inefficiently hard. The apprentice can work on both knowledge-complementary and knowledge-independent tasks. We study the optimal time path of effort distortions and their impact on the knowledge transfer, and analyze the effect of regulatory limits on the length of apprenticeships and on how much effort apprentices are allowed to provide.

JEL-codes: D82 D86 J24 J41 M53 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/aer.20171939
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Handle: RePEc:aea:aecrev:v:109:y:2019:i:11:p:3780-3812