Employers’ willingness to invest in the training of temporary versus permanent workers: A discrete choice experiment

Abstract

Various studies have shown that temporary workers participate less in training than those on permanent contracts. This paper investigates whether there is a difference in employer willingness to provide training to temporary vs. permanent workers and estimates the size of these differences under different cost-benefit related conditions. Building on a theoretical framework for employers’ provision of training that includes the major potential sources of cost-benefit differences associated with training investments in employees with different types of employment contracts, we use a discrete choice experiment to estimate the elasticity of a training offer to three attributes affecting employers’ expected net benefits from training investments: (1) the transferability of the skills being trained, (2) the financial contribution of the employee to the training costs and (3) the repayment of training costs when the employee quits early. We find that the effect of the transferability of the training is small and not robust to alternative model specifications. Instead, employers’ lower likelihood of investing in temporary workers is affected by two attributes: a financial contribution to the training costs and a repayment of training costs in case of early quits. Employers’ willingness to invest in temporary workers will particularly increase when introducing a contract clause that workers will repay their training costs when they quit within a year after the training.