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Why do firms train apprentices? The net cost puzzle reconsidered

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  • Mohrenweiser, Jens
  • Zwick, Thomas

Abstract

This paper analyses the impact of increasing the share of apprentices at the cost of the share of unskilled or semi-skilled employees on establishment performance. We use representative matched employer-employee panel data and correct for estimation biases. We show that an increase of the apprentice share in trade, commercial, craft or construction occupations has a positive impact on establishment performance. Establishments that increase the apprentice share in manufacturing occupations face a negative impact on performance, however. These results shed a new light on the stylised fact that apprenticeship training always leads to net costs during the apprenticeship period in Germany: we argue that establishments only hire apprentices at a cost if their skills are relatively specific, their retention rate is high and skilled employees are hard to hire.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 16 (2009)
Issue (Month): 6 (December)
Pages: 631-637

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Handle: RePEc:eee:labeco:v:16:y:2009:i:6:p:631-637

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Web page: http://www.elsevier.com/locate/labeco

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Keywords: Apprenticeship training Performance Panel estimation;

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