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The Effect of Tuition Reimbursement on Turnover: A Case Study Analysis

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  • Colleen N. Flaherty

Abstract

Tuition reimbursement programs provide financial assistance for direct costs of education and are a type of general skills training program commonly offered by employers in the United States. Standard human capital theory argues that investment in firm-specific skills reduces turnover, while investment in general skills training could result in increased turnover. However, firms cite increased retention as a motivation for offering tuition reimbursement programs. This rationale for offering these programs challenges the predictions of the standard human capital model. This paper tests empirically whether participation in tuition reimbursement programs increases employee retention using data from a non-profit institution. To document the prevalence of tuition reimbursement programs, the case study analysis is supplemented with findings from the Survey of Employer-Provided Training, 1995 (SEPT95). This paper finds that participation in tuition reimbursement programs reduces employee turnover.

Suggested Citation

  • Colleen N. Flaherty, 2007. "The Effect of Tuition Reimbursement on Turnover: A Case Study Analysis," NBER Working Papers 12975, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:12975
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    Cited by:

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    2. Spencer, Marilyn & Gevrek, Deniz & Chambers, Valrie & Bowden, Randall, 2015. "Labor Supply and Productivity Responses to Non-Salary Benefits: Do They Work? If So, at What Level Do They Work Best?," IZA Discussion Papers 9153, Institute of Labor Economics (IZA).
    3. Koray Sayili, 2020. "Retaining skilled employees: A human capital model with innovation and entrepreneurship," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(6), pages 911-923, September.

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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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