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Financing Apprenticeship Training: Evidence from Germany

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  • Dietmar Harhoff
  • Thomas J. Kane

Abstract

Much of the current discussion promoting apprenticeship programs in the U.S. proceeds as if it is simply a matter of historical accident or lack of imagination which has hindered human capital investment by U.S. firms. However, the cause may be rooted more deeply in our labor market institutions. This paper discusses the structure of incentives undergirding the German system of apprenticeship training. Many German firms face large net costs of apprenticeship training. Yet they continue to provide such training in spite of considerable worker turnover upon completion of the training. The simplest human capital model suggests that employers would be willing to finance only firm-specific training. Rather than engage in a futile debate over the general or specific nature of the skills being provided, we first describe and evaluate 3 characteristics of the German labor market which may lead firms to accept part of the cost of general training even in the face of worker turnover. We then attempt to understand why German workers and firms may be more willing to invest even in firm-specific skills than in the U.S.. Finally, we discuss some implications of these results for the current vocational training debate in the U.S..

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4557.

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Date of creation: Nov 1993
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Handle: RePEc:nbr:nberwo:4557

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References

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  1. Katharine G. Abraham & Susan N. Houseman, 1993. "Job Security in America: Lessons from Germany," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number kagsnh1993.
  2. James Heckman, 1993. "Assessing Clinton's Program on Job Training, Workfare, and Education in the Workplace," NBER Working Papers 4428, National Bureau of Economic Research, Inc.
  3. Jovanovic, Boyan, 1979. "Firm-specific Capital and Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1246-60, December.
  4. Lazear, Edward P, 1981. "Agency, Earnings Profiles, Productivity, and Hours Restrictions," American Economic Review, American Economic Association, vol. 71(4), pages 606-20, September.
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Cited by:
  1. Daron Acemoglu & Jörn-Steffen Pischke, 1998. "Why Do Firms Train? Theory And Evidence," The Quarterly Journal of Economics, MIT Press, vol. 113(1), pages 78-118, February.
  2. Raghuram G. Rajan & Luigi Zingales, 2001. "The Firm As A Dedicated Hierarchy: A Theory Of The Origins And Growth Of Firms," The Quarterly Journal of Economics, MIT Press, vol. 116(3), pages 805-851, August.
  3. Frank Oskamp & Dennis J. Snower, 2007. "Interactions between Employment and Training Policies," Kiel Working Papers 1389, Kiel Institute for the World Economy.
  4. Damon Clark & Rene Fahr, 2002. "The promise of workplace training for non-college bound youth: theory and evidence from German apprenticeship," LSE Research Online Documents on Economics 20092, London School of Economics and Political Science, LSE Library.
  5. James Malcomson & James W. Maw, 2002. "General Training by Firms, Apprentice Contracts, and Public Policy," Economics Series Working Papers 86, University of Oxford, Department of Economics.
  6. Inkmann, Joachim & Klotz, Stefan & Pohlmeier, Winfried, 1998. "Growing into Work - Pseudo Panel Data Evidence on Labor Market Entrance in Germany," ZEW Discussion Papers 98-47, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  7. Jorn-Steffen Pischke, 1996. "Continuous Training in Germany," NBER Working Papers 5829, National Bureau of Economic Research, Inc.
  8. Clark, Damon & RenÈ Fahr, 2002. "The Promise of Workplace Training for Non-College-Bound Youth: Theory and Evidence from German Apprenticeship," Royal Economic Society Annual Conference 2002 52, Royal Economic Society.
  9. Locke, Richard M., 1959- & Jacoby, Wade., 1995. "The dilemmas of diffusion : institutional transfer and the remaking of vocational training practices in Eastern Germany," Working papers 3846-95., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  10. Clark, Damon, 2002. "Matching, Screening and Firm Investment in General Training: Theory and Evidence," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 A2-4, International Conferences on Panel Data.
  11. Lars Vilhuber, 1999. "Sector-Specific Training and Mobility in Germany," CIRANO Working Papers 99s-03, CIRANO.
  12. Franz, Wolfgang & Soskice, David W., 1994. "The German apprenticeship system," Discussion Papers 11, University of Konstanz, Center for International Labor Economics (CILE).

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