Why Do Firms Train? Empirical Evidence on the First Labor Market Outcomes of Graduated Apprentices (original) (raw)
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Apprentices cause high costs for training firms, while it remains unclear if their productivity during the training period offsets these costs. To give an answer, this paper tests the hypothesis that firms have to re-earn net costs by paying their former apprentices a lower wage in comparison to skilled employees hired from the labor market. We analyze the wage differences between employer changers and stayers after apprenticeship. We make both groups as similar as possible in order to avoid estimation biases induced by selection effects. We calculate the wage effect of a change of employer on the individual deviation from the average profession-specific wage markup. We use spell data from the employment statistics of the Federal Employment Agency (IABS) from 1993 to 2003. We find no net costs of apprentices. In the trading occupations employer changers enjoy a wage markup which is higher than the wage differences during the apprenticeship period. As this wage markup further increas...
Training intensity and first labor market outcomes of apprenticeship graduates
International Journal of Manpower, 2004
The apprenticeship system is the most important source of formal post-secondary training in Germany. Using German register data-the IAB Employment Sample-it is found that apprentices staying with their training firm after graduation have a longer first-job durations but not higher wages than apprentices leaving the training firm. Retention rates, first job durations, and post-apprenticeship wages are all increasing functions of training intensity. Some implications for the ongoing debate as to why firms are willing to invest in general training are discussed.
SSRN Electronic Journal, 2001
This paper assesses the potential of 'workplace training' with reference to German Apprenticeship. When occupational matching is important, we derive conditions under which firms provide 'optimal' training packages. Since the German system broadly meets these conditions, we evaluate the effectiveness of apprenticeship using a large administrative dataset. We find returns to apprenticeship for even the lowest ability school-leavers comparable to standard estimates of the return to school, and show that training is transferable across a wide range of occupations, such as a one-digit occupation group. We conclude that the positive experience with German Apprenticeship Training may guide the design of similar policies in other countries.
The financing of apprenticeship training in the light of labor market regulations
Labour Economics, 2010
In this paper we analyze the training behavior of firms in Germany and Switzerlandtwo countries with a comparable apprenticeship system but strong differences in the regulation of their respective labor markets. We make use of two representative firm-level surveys on the provision of apprenticeship training to analyze differences in the costs and benefits of training and the firm's training decision. Our results suggest that firms are more likely to make a substantial (short-term) net investment in apprenticeship training in the presence of strong employment protection laws.
Firms' Training Investments and Post - Training Wages of Apprentices
2016
In this paper, we examine the relation between a firm's training investment and the post-training wages of apprenticeship graduates. For our analysis, we first calculate a training investment indicator using detailed information about firm-level training costs. We then merge the firm-level data with individual-level administrative data on employment and wages of apprenticeship graduates. Using regression models controlling for selection into employment, we find that a firm investment in training relates positively with graduates' post-training wages. Doubling a firm's training investment leads to a wage mark-up of about 2.8%. This result is robust to different specifications. However, we find that especially graduates from low-investment firms benefit from a higher training investment. The wage mark-up for graduates from firms with already high investment levels is small and statistically not significant.
Technological change and skill obsolescence: the case of German apprenticeship training
2000
The paper analyses the applicability of vocational training and the earnings of apprentice~using survey data from West Germany in 1979, 1985/86 and 1991/92. The applicability has decreased remarkably between 1979 and 1991/92. The objective of the analysis is a sUlvey-data-based assessment of the German apprenticeship system in a time of rapid technological change. The data sets used are the three available cross-sections of Qualification and Career Surveys commissioned by the Federal Institute for Vocational Training and the Research Institute of the Federal Labour Office. For each cross-section we estimate an ordered probit model testing demand (including technological progress) and supply-side factors affecting the applicability of what workers have learned during apprenticeship. Furthermore, we estimate earnings functions with the same specification, testing whether firmspecific and socioeconomic factors have the same relevance for applicability and earnings. The results indicate that on-the-job investment in human capital has become more important relative to vocational training. Measures for improving the German dual vocational training system are suggested.
The determinants of apprenticeship training with particular reference tobusiness expectations
2007
Whilst in applied empirical research, training in general human capital is mainly explained by structural characteristics of firms, this paper introduces business expectations as an additional explanatory factor. Business expectations are strictly time-variate and firm-specific and reflect both a firm's development in competitive markets and in the business cycle. We assume that a firm's business expectations strongly modify the cost-utility concept for firms' decisions as regards providing apprenticeship places. When controlling for firms' structural characteristics, static econometric models support our assumption that a change in business expectations leads to an asymmetric adjustment process of firms' qualitative decisions regarding apprenticeship training. Concerning the quantitative decision as to how many apprenticeship places a firm provides we found a significant but not asymmetric response to a change in business expectations. A dynamic approach confirms the results obtained in the static models of a symmetric quantitative adjustment process in a short-term perspective. In a longer perspective the dynamic model supports the assumption of an asymmetric quantitative adjustment process. Further on an application shows that an increasing uncertainty regarding business expectations tends to reduce the apprenticeship training at firm level. * This paper was released for publication in September 2007. ** We thank Lutz Bellmann, Anette Haas, Thorsten Schank, and two anonymus referees for valuable comments and suggestions. The usual disclaimer applies.
Do firms benefit from apprenticeship investments?
IZA world of labor, 2014
Pros The apprentice's contribution to production is large enough to offset most costs to firms. By retaining most apprentices, firms benefit substantially from low recruitment and training costs. Knowing that all trained apprentices have mastered a common set of skills is valuable to firms. Apprenticeship training enhances subsequent innovation within the training firm. Treating apprenticeship expenses as capital investments would improve measured gains. aUtHoR'S maIn meSSaGe Apprenticeship training is usually a profitable investment for firms as well as workers. Often, firms can recoup all or most of their costs within the apprenticeship period. By providing firms with information on economic returns, by helping them set up apprenticeships, and by funding off-site training, policymakers can promote the expansion of effective career training and increased worker earnings with only modest public expenditures. Cons Most firms in advanced economies do not offer apprenticeships. Firms perceive weak returns because they fear trained apprentices will be hired away by other firms. Some estimates show firms recover only modest parts of their investment during the training period. Quantitative estimates of gains for employers are uncertain, based on only a few studies. It is difficult for firms to assess the long-term benefits of apprenticeship investments. Do firms benefit from apprenticeship investments? Why spending on occupational skills can yield economic returns to employers
European Sociological Review, 1995
The German vocational education system, especially its dual system of apprenticeship training, is often praised for providing vocational skills geared to current practices in specific occupations. Yet only about half of all Germans currently have jobs that match their vocational education. This paper uses data from the German SocioEconomic Panel, a nationally representative household panel study, to examine a variety of individual and structural level variables hypothesized to influence the likelihood of an individual being employed in a position that fits his or her vocational training. It also identifies factors that influence the probability that an individual moves from a job that does not fit his or her training to a position that does. Finally, the paper examines earnings differences between persons with varying types of vocational education and considers if these differences depend on whether or not an individual is employed in a job that fits.
Good Occupation - Bad Occupation? The Quality of Apprenticeship Training
SSRN Electronic Journal, 2000
Small average wage effects of employer and/or occupation changes mask large differences between occupation groups and apprentices with different schooling backgrounds. Apprentices in commerce and trading occupations strongly profit from an employer change. Employer and occupation changers in industrial occupations face large wage disadvantages however. We are the first to analyse these differences. Quality differences of apprenticeship quality between training firms that have been mainly discussed so far are small, however. This paper also explains differences between previous findings by comparing their estimation strategies. It demonstrates that selectivity into occupations and changers, unobserved heterogeneity between occupations, and the sample selection matter and proposes several improvements in the estimation technique to measure apprenticeship quality.