Does delegation increaase worker training?

Christos Bilanakos, John S. Heywood, John G. Sessions, Nikolaos Theodoropoulos

Research output: Contribution to journalArticle

1 Citation (Scopus)

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 languageEnglish
Pages (from-to)1089-1115
Number of pages27
JournalEconomic Inquiry
Volume56
Issue number2
DOIs
Publication statusPublished - 1 Apr 2018

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics

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    Bilanakos, C., Heywood, J. S., Sessions, J. G., & Theodoropoulos, N. (2018). Does delegation increaase worker training? Economic Inquiry, 56(2), 1089-1115. https://doi.org/10.1111/ecin.12515