Locus of Control and Investment in Training

Abstract

We extend standard models of work-related training by explicitly incorporating workers’ locus of control into the investment decision through the returns they expect. Our model predicts that higher internal control results in increased take-up of general, but not specific, training. This prediction is empirically validated using data from the German Socioeconomic Panel (SOEP). We provide empirical evidence that locus of control influences participation in training through its effect on workers’ expectations about future wage increases rather than actual wage increases. Our results provide an important explanation for underinvestment in training and suggest that those with an external sense of control may require additional training support. © 2022. by the Board of Regents of the University ofWisconsin System

Keywords

Author Keywords

Not provided

Index Keywords

training Germany wage investment empirical analysis

Author Affiliations

Universität Potsdam, Potsdam, Brandenburg, Germany

The University of Sydney, Sydney, NSW, Australia

CNRS Centre National de la Recherche Scientifique, Paris, Ile-de-France, France

Funding & Acknowledgements

Australian Research Council, ARC

Grant: ANR-11-IDEX-0003/Labex Ecodec/ANR-11-LABX-0047, CE140100027, DP110103456

Marco Caliendo is a professor at the University of Potsdam and a research fellow at IZA, DIW, and IAB (caliendo@uni-potsdam.de). Deborah A. Cobb-Clark is a professor at the University of Sydney and a research fellow at IZA and the ARC Life Course Centre. Cosima Obst is a research assistant at the University of Potsdam. Helke Seitz is a junior policy analyst at OECD. Arne Uhlendorff is CNRS researcher at the CREST and a research fellow at IAB, IZA, and DIW. The authors thank Thomas Siedler, Timo Hener, Anett John, two anonymous referees, and participants in seminars at Melbourne Institute of Applied Economic and Social Research (MIASER), Berlin Network of Labor Market Research (BeNA), University of Sydney, University of New South Wales, University of Potsdam, Freie Universität Berlin, as well as the Copenhagen Business School and the annual meetings of ESPE in Berlin and EALE in Ghent for valuable comments, and Melisa Bubonya for excellent research assistance. Caliendo is grateful to the Melbourne Institute for financial support during his research visit, during which part of this research was conducted. Cobb-Clark is grateful for financial support from the Australian Research Council (DP110103456; CE140100027). Uhlendorff is grateful to Investissements d’Avenir (ANR-11-IDEX-0003/Labex Ecodec/ANR-11-LABX-0047) for financial support. This paper uses data from the German Socio-Economic Panel (SOEP) from the DIW. The data can be obtained by filing a request directly with the SOEP (https://www.diw.de/soep).

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Locus of Control and Investment in Training

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