DOES DELEGATION INCREASE WORKER TRAINING? |
| |
| Authors: | Christos Bilanakos John S Heywood John G Sessions Nikolaos Theodoropoulos |
| |
| Institution: | 1. +30 6939694996+30 2106987459;2. Postdoctoral Researcher, Department of Management Science and Technology, Athens University of Economics and Business, Athens, Greece;3. (414) 229‐4310(414) 229‐5915;4. Distinguished Professor, Department of Economics, University of Wisconsin‐Milwaukee, Milwaukee, WI;5. +44 1225 384517+44 1225 383423;6. Professor of Economics, Department of Economics and IZA, University of Bath, Bath, UK |
| |
| 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) |
| |
| Keywords: | |
|
|
