Risk preferences and training investments

Arbeitspapier

We analyze workers' risk preferences and training investments. Our conceptual framework differentiates between the investment risk and insurance mechanisms underpinning training decisions. Investment risk leads risk-averse workers to train less; they undertake more training if it insures them against future losses. We use the German Socio-Economic Panel (SOEP) to demonstrate that risk affinity is associated with more training, implying that, on average, investment risks dominate the insurance benefits of training. Crucially, this relationship is evident only for general training; there is no relationship between risk attitudes and specific training. Thus, as expected, risk preferences matter more when skills are transferable { and workers have a vested interest in training outcomes { than when they are not. Finally, we provide evidence that the insurance benefits of training are concentrated among workers with uncertain employment relationships or limited access to public insurance schemes.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SOEPpapers on Multidisciplinary Panel Data Research ; No. 1113

Classification and Topics

• Classification: Wirtschaft ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models ; Criteria for Decision-Making under Risk and Uncertainty
• Subject: Human Capital Investment ; Work-related Training ; Risk Preferences

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Caliendo, Marco ; Cobb-Clark, Deborah A. ; Obst, Cosima ; Uhlendorff, Arne
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/226813
• Last update: 10.03.2025, 11:44 AM CET