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What Makes Firm-Based Vocational Training Schemes Successful? The Role of Commitment

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  • Christian Dustmann
  • Uta Schönberg

Abstract

This paper studies a possible market failure in the firm-based vocational training market: training may be too complex to be specified in a contract so that it is legally enforceable, resulting in the inability of firms to commit to training provision. We present a model of firm provided training and show that training is substantially lower in the no commitment than in the commitment case. Thus, firm-based vocational training schemes are more successful in countries where commitment to training provision is more widespread. (JEL J24, L25, M12, M53)

Suggested Citation

  • Christian Dustmann & Uta Schönberg, 2012. "What Makes Firm-Based Vocational Training Schemes Successful? The Role of Commitment," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 36-61, April.
  • Handle: RePEc:aea:aejapp:v:4:y:2012:i:2:p:36-61
    Note: DOI: 10.1257/app.4.2.36
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    References listed on IDEAS

    as
    1. Daron Acemoglu & Jörn-Steffen Pischke, 1998. "Why Do Firms Train? Theory and Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 113(1), pages 79-119.
    2. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1-9.
    3. Jozef Konings & Stijn Vanormelingen, 2015. "The Impact of Training on Productivity and Wages: Firm-Level Evidence," The Review of Economics and Statistics, MIT Press, vol. 97(2), pages 485-497, May.
    4. Rainer Winkelmann, 1997. "How young workers get their training: A survey of Germany versus the United States," Journal of Population Economics, Springer;European Society for Population Economics, vol. 10(2), pages 159-170.
    5. Bernd Fitzenberger & Astrid Kunze, 2005. "Vocational Training and Gender: Wages and Occupational Mobility among Young Workers," Oxford Review of Economic Policy, Oxford University Press, vol. 21(3), pages 392-415, Autumn.
    6. David H. Autor, 2001. "Why Do Temporary Help Firms Provide Free General Skills Training?," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1409-1448.
    7. Paul Ryan, 2001. "The School-to-Work Transition: A Cross-National Perspective: Corrigendum," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 767-767, September.
    8. Edward P. Lazear, 2009. "Firm-Specific Human Capital: A Skill-Weights Approach," Journal of Political Economy, University of Chicago Press, vol. 117(5), pages 914-940, October.
    9. Christian Dustmann & Uta Schönberg, 2009. "Training and Union Wages," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 363-376, May.
    10. Paul Ryan & Howard Gospel & Paul Lewis, 2007. "Large Employers and Apprenticeship Training in Britain," British Journal of Industrial Relations, London School of Economics, vol. 45(1), pages 127-153, March.
    11. Stevens, Margaret, 1994. "An Investment Model for the Supply of Training by Employers," Economic Journal, Royal Economic Society, vol. 104(424), pages 556-570, May.
    12. Conti, Gabriella, 2005. "Training, productivity and wages in Italy," Labour Economics, Elsevier, vol. 12(4), pages 557-576, August.
    13. Paul Ryan, 2001. "The School-to-Work Transition: A Cross-National Perspective," Journal of Economic Literature, American Economic Association, vol. 39(1), pages 34-92, March.
    14. Howard Gospel, 1998. "The Revival of Apprenticeship Training in Britain?," British Journal of Industrial Relations, London School of Economics, vol. 36(3), pages 435-457, September.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. repec:eee:labeco:v:53:y:2018:i:c:p:75-96 is not listed on IDEAS
    2. Christian Dustmann & Francesco Fasani & Tommaso Frattini & Luigi Minale & Uta Schönberg, 2017. "On the economics and politics of refugee migration," Economic Policy, CEPR;CES;MSH, vol. 32(91), pages 497-550.
    3. repec:bdp:wpaper:2015001 is not listed on IDEAS
    4. Luca Moretti & Martin Mayerl & Samuel Muehlemann & Peter Schloegl & Stefan C. Wolter, 2017. "So similar and yet so different: A comparative analysis of a firm's net costs and post-apprenticeship training benefits in Austria and Switzerland," Economics of Education Working Paper Series 0137, University of Zurich, Department of Business Administration (IBW), revised Apr 2018.
    5. repec:eee:labeco:v:47:y:2017:i:c:p:163-181 is not listed on IDEAS
    6. Moretti, Luca & Mayerl, Martin & Mühlemann, Samuel & Schlögl, Peter & Wolter, Stefan C., 2017. "So Similar and Yet So Different: A Comparative Analysis of a Firm's Cost and Benefits of Apprenticeship Training in Austria and Switzerland," IZA Discussion Papers 11081, Institute of Labor Economics (IZA).
    7. Fitzenberger, Bernd & Licklederer, Stefanie & Zwiener, Hanna, 2015. "Mobility across firms and occupations among graduates from apprenticeship," Labour Economics, Elsevier, vol. 34(C), pages 138-151.
    8. Daniel Horn, 2014. "The Effectiveness of Apprenticeship Training - a within track comparison of workplace-based and school-based vocational training in Hungary," Budapest Working Papers on the Labour Market 1405, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    9. Christian Dustmann & Albrecht Glitz, 2015. "How Do Industries and Firms Respond to Changes in Local Labor Supply?," Journal of Labor Economics, University of Chicago Press, vol. 33(3), pages 711-750.
    10. d'Agostino, Giorgio & Raitano, Michele & Scarlato, Margherita, 2019. "Job mobility and heterogeneous returns to apprenticeship training in Italy," MPRA Paper 92261, University Library of Munich, Germany.
    11. Jens Mohrenweiser & Thomas Zwick & Uschi Backes‐Gellner, 2019. "Poaching and Firm‐Sponsored Training," British Journal of Industrial Relations, London School of Economics, vol. 57(1), pages 143-181, March.
    12. Horn, Dániel, 2014. "A szakiskolai tanoncképzés rövid távú munkaerő-piaci hatásai
      [The short-term labour-market effects of vocational apprenticeship training]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 975-999.
    13. Sonedda, Daniela, 2018. "Human capital investment and job creation: the role of the education and production systems," MPRA Paper 91902, University Library of Munich, Germany.
    14. Emre Ekinci & Nikos Theodoropoulos, 2018. "Informal Delegation and Training," University of Cyprus Working Papers in Economics 02-2018, University of Cyprus Department of Economics.
    15. Agata MAIDA & Daniela SONEDDA, 2019. "Getting Out of the Starting Gate on the Right Foot: Employment Effects of Investment in Human Capital," Departmental Working Papers 2019-03, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    16. Eichhorst, Werner & Rodríguez-Planas, Núria & Schmidl, Ricarda & Zimmermann, Klaus F., 2012. "A Roadmap to Vocational Education and Training Systems Around the World," IZA Discussion Papers 7110, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

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