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  3. American Economic Review
  4. November 2019
  5. Training and Effort Dynamics in Apprenticeship

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Training and Effort Dynamics in Apprenticeship

  • Drew Fudenberg
  • Luis Rayo
American Economic Review
vol. 109, no. 11, November 2019
(pp. 3780–3812)
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Abstract

A principal specifies time paths of effort provision, task allocation, and knowledge transfer for a cash-constrained apprentice, who is free to walk away at any time. In the optimal contract the apprentice pays for training by working for low or no wages and by working inefficiently hard. The apprentice can work on both knowledge-complementary and knowledge-independent tasks. We study the optimal time path of effort distortions and their impact on the knowledge transfer, and analyze the effect of regulatory limits on the length of apprenticeships and on how much effort apprentices are allowed to provide.

Citation

Fudenberg, Drew, and Luis Rayo. 2019. "Training and Effort Dynamics in Apprenticeship." American Economic Review, 109 (11): 3780–3812. DOI: 10.1257/aer.20171939

Additional Materials

JEL Classification

  • D82 Asymmetric and Private Information; Mechanism Design
  • D86 Economics of Contract: Theory
  • J24 Human Capital; Skills; Occupational Choice; Labor Productivity
  • J41 Labor Contracts
  • M53 Personnel Economics: Training