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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. 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.
    2. 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.
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    4. 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.
    5. Christian Dustmann & Uta Schönberg, 2009. "Training and Union Wages," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 363-376, May.
    6. Conti, Gabriella, 2005. "Training, productivity and wages in Italy," Labour Economics, Elsevier, vol. 12(4), pages 557-576, August.
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    9. 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.
    10. 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.
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    12. 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.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Muehlemann, Samuel & Pfeifer, Harald & Wittek, Bernhard, 2020. "The effect of business cycle expectations on the German apprenticeship market: Estimating the impact of Covid-19," Research Memorandum 020, Maastricht University, Graduate School of Business and Economics (GSBE).
    2. Berge, Wiljan van den, 2018. "Bad start, bad match? The early career effects of graduating in a recession for vocational and academic graduates," Labour Economics, Elsevier, vol. 53(C), pages 75-96.
    3. 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.
    4. Mountford, Andrew & Wadsworth, Jonathan, 2019. "Trainspotting: "Good Jobs", Training and Skilled Immigration," IZA Discussion Papers 12409, Institute of Labor Economics (IZA).
    5. repec:bdp:wpaper:2015001 is not listed on IDEAS
    6. 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.
    7. Crepon,Bruno Jacques Jean Philippe & Premand,Patrick, 2018. "Creating new positions ? direct and indirect effects of a subsidized apprenticeship program," Policy Research Working Paper Series 8561, The World Bank.
    8. Schumann, Mathias, 2017. "The effects of minimum wages on firm-financed apprenticeship training," Labour Economics, Elsevier, vol. 47(C), pages 163-181.
    9. 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).
    10. 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.
    11. 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.
    12. 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.
    13. 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.
    14. 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.
    15. 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.
    16. Jan Hogrefe & Jens Wrona, 2015. "Trade, tasks and training: The effect of offshoring on individual skill upgrading," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(4), pages 1537-1560, November.
    17. 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.
    18. Emre Ekinci & Nikos Theodoropoulos, 2018. "Informal Delegation and Training," University of Cyprus Working Papers in Economics 02-2018, University of Cyprus Department of Economics.
    19. Muehlemann, Samuel & Pfeifer, Harald & Wittek, Bernhard, 2020. "The effect of business cycle expectations on the German apprenticeship market: Estimating the impact of Covid-19," ROA Research Memorandum 008, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    20. Mühlemann, Samuel & Pfeifer, Harald & Wittek, Bernhard, 2020. "The Effect of Business Cycle Expectations on the German Apprenticeship Market: Estimating the Impact of COVID-19," IZA Discussion Papers 13368, Institute of Labor Economics (IZA).
    21. Daniela Sonedda, 2020. "Same rules but different outcomes: regional disparities in permanent employment rates of a nation-wide reform of vocational apprenticeships," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(2), pages 583-620, July.
    22. D. Sonedda, 2019. "Regional disparities in the functioning of the labour markets," Working Paper CRENoS 201915, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    23. 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.
    24. 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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    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. What Makes Firm-Based Vocational Training Schemes Successful? The Role of Commitment (American Economic Journal: Applied Economics 2012) in ReplicationWiki

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