The retention effect of training: Portability, visibility, and credibility1

Abstract

This paper analyses the effect of training participation on employees’ retention in the training establishment. On the basis of the human capital and monopsony theories the effect of portability, visibility, and credibility of training on employee retention is jointly calculated. We use an extensive German linked employer–employee panel data set with detailed survey information on the training history and administrative labour market information of 4318 employees working in 149 establishments (WeLL-ADIAB). In multivariate panel regressions including internal instruments we compare the probability of staying with the same employer between training participants and employees who were by chance unable to participate in a planned training event. The high portability of training contents and training visibility provided by training certificates reduce the retention effect of training independently. Retention is reduced further when training content is reported credibly, that is, it is provided and certified by external institutions. However, the total effect of portable, visible, and credible training on retention is still positive. This paper therefore implies that employers can reap a double dividend of higher productivity and increased retention even from general, visible, and credible training.

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