Behavioral Economics and Workforce Development: A Review of the Literature from Labor Economics and the Broader Field

There is mutual benefit for employers and workers when workers improve their skills beyond the minimum requirements for their position—a fact not lost on employers, many of who are willing to provide education and training opportunities to staff, including frontline workers. These opportunities typically include on-the-job-training, tuition reimbursement for postsecondary courses, and paid leave to attend classes. Despite often generous budgets for these activities, relatively few workers take advantage of these opportunities, potentially limiting increases in productivity, wages and longer-term career advancement (Tompson, Benz, Agiesta, & Junius, 2013). This dilemma raises an interesting research question: Can emerging lessons from behavioral science experiments be applied to cutting the Gordian Knot of worker participation in education and training programs? This review of current literature on the topic is intended to explore the strengths and limitations of applying tools of behavioral sciences to increase the participation and completion rate of training for lower-wage, frontline incumbent workers in ways that benefit both workers and sponsoring firms.