Why Do Employers Pay For College?

Peter Cappelli

NBER Working Paper No. 9225
Issued in September 2002
NBER Program(s):   LS

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.

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Published: Cappelli, Peter. “Why Do Employers Pay for College?” Journal of Econometrics 121, 1-2 (August 2004): 213-241.

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