American Economic Review Vol. 109 No. 11 2019

Training and Effort Dynamics in Apprenticeship

Drew Fudenberg¹; Luis Rayo²

¹ Department of Economics, MIT, 77 Massachusetts Avenue, Building E52-418, Cambridge MA 02139 (email: ) · ² Kellogg School of Management, Northwestern University, 2211 Campus Drive, Evanston, IL 60208, and CEPR (email: )

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.

DOI

10.1257/aer.20171939

Volume

109

Issue

11

Pages

3780-3812

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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