Do Apprenticeships Pay? Evidence for England

The importance of apprenticeships for early labour market transitions varies across countries and over time. In recent times, there has been a policy drive to increase the number of people undertaking apprenticeships in England and there are plans to dramatically change the post-16 system, which would include making apprenticeships a more important part of it. This raises the question as to how beneficial apprenticeships are to young people currently - especially in the context of a country without an existing broad-base of apprenticeship provision. In this paper, we use administrative data to track students through their schooling and into the labour market. We analyse the payoff to apprenticeships for young people in the short term (when they are around 23 years old) and after a few years in the labour market (when they around 28 years old). We ask whether there is a payoff for young men and women in terms of employment and earnings. Our results suggest a positive earnings differential on average which has a causal interpretation. However, there is huge variability in the estimated earnings differential between sectors and this has important implications for the gender earnings gap because of the different choices made by men and women.