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Why Do Firms Train Apprentices? The Net Cost Puzzle Reconsidered

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Author Info
Mohrenweiser, Jens
Zwick, Thomas

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Abstract

This paper investigates the short-term costs and benefits of apprenticeship training in Germany. It calls into question the popular stylised fact that apprenticeship training always leads to net costs during the apprenticeship period. We analyse the impact of the proportion of different occupational groups of apprentices on firm performance. We use representative matched employer?employee panel data that allow us to correct for different sources of estimation bias. We show that the proportion of apprentices in trade, commercial, craft and construction occupations has a direct positive impact on firm performance: the companies cover their training costs immediately. In contrast, companies with apprentices in the manufacturing occupations face net training costs during the apprenticeship period but gain by the long-term employment of its graduate apprentices.

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Publisher Info
Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 08-019.

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Date of creation: 2008
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Handle: RePEc:zbw:zewdip:7228

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Related research
Keywords: apprenticeship training; performance; panel data estimation;

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Find related papers by JEL classification:
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Anke S. Kessler & Christoph Lülfesmann, 2006. "The Theory of Human Capital Revisited: on the Interaction of General and Specific Investments," Economic Journal, Royal Economic Society, vol. 116(514), pages 903-923, October. [Downloadable!] (restricted)
    Other versions:
  2. Acemoglu, Daron & Pischke, Jörn-Steffen, 1996. "Why do Firms Train? Theory and Evidence," CEPR Discussion Papers 1460, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Hilary Steedman, 2001. "Benchmarking Apprenticeship: UK and Continental Europe Compared," CEP Discussion Papers dp0513, Centre for Economic Performance, LSE. [Downloadable!]
  4. Dustmann; Christian & Schönberg, Uta, 2004. "Training and Union Wages," IZA Discussion Papers 1435, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. Chang, Chun & Wang, Yijiang, 1996. "Human Capital Investment under Asymmetric Information: The Pigovian Conjecture Revisited," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 505-19, July. [Downloadable!] (restricted)
  6. Acemoglu, Daron & Pischke, Jorn-Steffen, 1999. "Beyond Becker: Training in Imperfect Labour Markets," Economic Journal, Royal Economic Society, vol. 109(453), pages F112-42, February. [Downloadable!] (restricted)
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  7. David Soskice, 1994. "Reconciling Markets and Institutions: The German Apprenticeship System," NBER Chapters, in: Training and the Private Sector, pages 25-60 National Bureau of Economic Research, Inc. [Downloadable!]
  8. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July. [Downloadable!] (restricted)
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  10. Jens Mohrenweiser & Uschi Backes-Gellner, 2008. "Apprenticeship Training – What for? Investment in Human Capital or Substitute for Cheap Labour?," Economics of Education Working Paper Series 0017, University of Zurich, Institute for Strategy and Business Economics (ISU). [Downloadable!]
  11. Jan Erik Askilden & Oivind Anti Nilsen, 2005. "Apprentices And Young Workers: A Study Of The Norwegian Youth Labour Market," Scottish Journal of Political Economy, Scottish Economic Society, vol. 52(1), pages 1-17, 02. [Downloadable!] (restricted)
  12. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May. [Downloadable!] (restricted)
  13. Katz, Eliakim & Ziderman, Adrian, 1990. "Investment in General Training: The Role of Information and Labour Mobility," Economic Journal, Royal Economic Society, vol. 100(403), pages 1147-58, December. [Downloadable!] (restricted)
  14. Bernd Fitzenberger & Aderonke Osikominu & Robert Völter, 2006. "Imputation Rules to Improve the Education Variable in the IAB Employment Subsample," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 126(3), pages 405-436.
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  15. Zwick, Thomas, 2004. "Employee participation and productivity," Labour Economics, Elsevier, vol. 11(6), pages 715-740, December. [Downloadable!] (restricted)
  16. Lorraine Dearden & Howard Reed & John Van Reenen, 2006. "The Impact of Training on Productivity and Wages: Evidence from British Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(4), pages 397-421, 08. [Downloadable!] (restricted)
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  17. Daron Acemoglu & Jorn-Steffen Pischke, 1999. "The Structure of Wages and Investment in General Training," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 539-572, June. [Downloadable!] (restricted)
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  18. Thomas J. Kane & Dietmar Harhoff, 1997. "Is the German apprenticeship system a panacea for the U.S. labor market?," Journal of Population Economics, Springer, vol. 10(2), pages 171-196. [Downloadable!] (restricted)
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  19. David Roodman, 2006. "How to Do xtabond2," North American Stata Users' Group Meetings 2006 8, Stata Users Group. [Downloadable!]
  20. Stefan C. Wolter & Samuel Mühlemann & Jürg Schweri, 2006. "Why Some Firms Train Apprentices and Many Others Do Not," German Economic Review, Blackwell Publishing, vol. 7, pages 249-264, 08. [Downloadable!] (restricted)
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  21. Paul Ryan & Howard Gospel & Paul Lewis, 2007. "Large Employers and Apprenticeship Training in Britain," British Journal of Industrial Relations, Blackwell Publishers Ltd/London School of Economics, vol. 45(1), pages 127-153, 03. [Downloadable!] (restricted)
  22. Peter Jacobebbinghaus & Jens Mohrenweiser & Thomas Zwick, 2008. "Wie kann die durchschnittliche Ausbildungsquote in Deutschland korrekt gemessen werden?," Economics of Education Working Paper Series 0034, University of Zurich, Institute for Strategy and Business Economics (ISU). [Downloadable!]
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Spyros Arvanitis & Tobias Stucki, 2008. "Training Propensity of Start-ups in Switzerland - A Study Based on Data for the Start-up Cohort 1996-97," Economics of Education Working Paper Series 0035, University of Zurich, Institute for Strategy and Business Economics (ISU). [Downloadable!]
    Other versions:
  2. Regina Dionisius & Samuel Muehlemann & Harald Pfeifer & Günter Walden & Felix Wenzelmann & Stefan C. Wolter, 2008. "Cost and Benefit of Apprenticeship Training – A Comparison of Germany and Switzerland," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  3. Spyros Arvanitis, 2008. "Are Firm Innovativeness and Firm Age Relevant for the Supply of Vocational Training? – A Study Based on Swiss Micro Data," Economics of Education Working Paper Series 0036, University of Zurich, Institute for Strategy and Business Economics (ISU). [Downloadable!]
    Other versions:
  4. Heinz Hollenstein & Tobias Stucki, 2008. "The Impact of ICT Usage, Workplace Organisation and Human Capital on the Provision of Apprenticeship Training : A Firm-level Analysis Based on Swiss Panel Data," KOF Working papers 08-205, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
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This page was last updated on 2009-11-12.

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