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Training Contracts, Worker Overconfidence, and the Provision of

Training Contracts, Worker Overconfidence, and the Provision of 2025

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The document examines the role of training contracts in the U.S. trucking industry, highlighting how these contracts can reduce worker turnover by imposing penalties for early quitting. It explores the relationship between worker overconfidence and productivity, revealing that many workers overestimate their future productivity, which influences their decision to sign training contracts. The study develops a structural learning model to analyze the effects of training contracts on firm profits and worker welfare, concluding that while training contracts can enhance firm profitability, they may also diminish worker welfare. Counterfactual analyses suggest that banning such contracts could improve worker welfare but decrease firm profits.

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