Locus of Control and Investment in Training
Abstract
Continuing participation in training is of importance for employees, firms, and the economy and a necesstiy in economies with technological change. Classical human capital theory differentiates between general and specific training according to the transferability of the newly acquired skills to other firms. Whilst the decision to invest in general training is taken by the worker, the decision to invest in firm-specific training is made by the firm. We build on standard theoretical models of workers' educational investments and firms' training investment and explicitly model the role of workers' locus of control. We analyze the relationship between locus of control and workers' participation in on-the-job training using data from the German Socio Economic Panel (SOEP). We find that locus of control indirectly in uences participation in general training through its effect on workers' expectations about future wage increases. Specifically, we find an asymmetric relationship between locus of control and future wage expectations when comparing training participants and non-participants in general training. Internal participants have higher wage expectations than external participants, while internal non-participants have lower wage expectations than external non-participants. There is no evidence of any link between locus of control and wage expectations for specific training.