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Training Contracts, Employee Turnover, and the Returns from Firm-sponsored General Training

Mitchell Hoffman and Stephen Burks

No 23247, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Firms may be reluctant to provide general training if workers can quit and use their gained skills elsewhere. “Training contracts” that impose a penalty for premature quitting can help alleviate this inefficiency. Using plausibly exogenous contractual variation from a leading trucking firm, we show that two training contracts significantly reduced post-training quitting, particularly when workers are approaching the end of their contracts. Simulating a structural model, we show that observed worker quit behavior exhibits aspects of optimization (for one of the two contracts), and that the contracts increased firm profits from training and reduced worker welfare relative to no contract.

JEL-codes: J24 J41 M53 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hrm and nep-lma
Date: 2017-03
Note: LE LS PE POL PR
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Working Paper: Training Contracts, Employee Turnover, and the Returns from Firm-Sponsored General Training (2017) Downloads
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