Working Paper: NBER ID: w9225
Authors: Peter Cappelli
Abstract: Employers routinely provide financial support for their employees who pursue post-secondary education despite the fact that it represents perhaps the classic example of a general skill' that costs the employer money and raises the market wages of employees who possess it. The analysis below examines why employers provide such support, and the results suggest that employees do not pay for tuition assistance through below market or training wages, the typical arrangement for funding general skills training. Instead, tuition assistance appears to select better quality employees who stay on the job longer, at least in part to keep making use of that benefit.
Keywords: tuition assistance; employer support; employee retention
JEL Codes: I2; J2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Employer-provided tuition assistance (M53) | Retention of higher-quality employees (M51) |
| Tuition assistance does not lead to below-market wages (J39) | Retention of higher-quality employees (M51) |
| Employer-provided tuition assistance (M53) | Employees more likely to stay longer with the company (M51) |
| Employees more likely to stay longer with the company (M51) | Retention of higher-quality employees (M51) |
| Employer-provided tuition assistance (M53) | Incentive for employees to remain in their positions (J63) |