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 D21, D22, D23, M53, M54).
| Original language | English |
|---|---|
| Pages (from-to) | 1089-1115 |
| Number of pages | 27 |
| Journal | Economic Inquiry |
| Volume | 56 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 1 Apr 2018 |
Funding
∗We acknowledge the Department of Trade and Industry, the Economic and Social Research Council, the Advisory, Conciliation and Arbitration Service, and the Policy Studies Institute as the originators of the Workplace Employee Relations Survey data, and the Data Archive at the University of Essex as the distributor of the data. None of these organizations bears any responsibility for our analysis or interpretation. We thank participants of the 20th Colloquium of Personnel Economics (COPE, Zurich), the Leeds Festival of Economics, Democracy and the Workplace, and seminar attendees at the University of Crete. We also thank the associate editor and two anonymous referees. Bilanakos: Postdoctoral Researcher, Department of Manage-ment Science and Technology, Athens University of Eco-nomics and Business, Athens, 10434, Greece. Phone +30 6939694996, Fax +30 2106987459, E-mail [email protected] Heywood: Distinguished Professor, Department of Eco-nomics, University of Wisconsin-Milwaukee, Milwaukee, WI 53211. Phone (414) 229-4310, Fax (414) 229-5915, E-mail [email protected] Sessions: Professor of Economics, Department of Economics and IZA, University of Bath, Bath, BA2 7AY, UK. Phone +44 1225 384517, Fax +44 1225 383423, E-mail [email protected] Theodoropoulos: Assistant Professor of Economics, Depart-ment of Economics, University of Cyprus, Nicosia, CY-1678, Cyprus. Phone +357 22893715, Fax +357 22895028, E-mail [email protected] Economic Inquiry (ISSN 0095-2583) Vol. 56, No. 2, April 2018, 1089–1115
ASJC Scopus subject areas
- General Business,Management and Accounting
- Economics and Econometrics