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Apprenticeship training: for investment or substitution?

  • Jens Mohrenweiser
  • Uschi Backes-Gellner

Purpose – The purpose of this paper is to derive an empirical method to identify different types of training strategies of companies based on publicly available company data. Design/methodology/approach – Using a ten-year panel, the within-firm retention rate, defined as the average proportion of apprentices staying in a company in relation to all apprenticeship graduates of a company over several years, was analyzed. The within-firm retention rate is used to identify these companies' training strategies. Findings – It was shown that companies' motivation for apprenticeship training in Germany is not homogeneous: 19 percent of all companies follow a substitution strategy and 44 percent follow an investment strategy. The determinants of the substitution strategy were estimated and, for example, sizeable differences were found between sectors with different skill requirements and between firms' coverage of industrial relations. Research limitations/implications – The method is well suited to classify substitution-motivated training firms but it is less precise in identifying the investment motivation. Moreover, very small firms which train only one apprentice need longer panel duration for precise results and therefore the classification results are less precise for very small firms. Practical implications – The classification can be used to identify determinants of company participation in apprenticeship training and to predict changes in demand for apprentices. Originality/value – A simple and innovative method of identifying different types of training motivation with publicly available company data was derived, which has so far been possible only with very detailed company-specific apprenticeship surveys.

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Article provided by Emerald Group Publishing in its journal International Journal of Manpower.

Volume (Year): 31 (2010)
Issue (Month): 5 (September)
Pages: 545-562

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Handle: RePEc:eme:ijmpps:v:31:y:2010:i:5:p:545-562
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  1. Acemoglu, D. & Pischke, J.S., 1997. "The Structure of Wages and Investment in General Training," Working papers 97-24, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Wolter, Stefan C. & Mühlemann, Samuel & Schweri, Jürg, 2003. "Why Some Firms Train Apprentices and Many Others Do Not," IZA Discussion Papers 916, Institute for the Study of Labor (IZA).
  3. Thomas Zwick, 2007. "Apprenticeship Training in Germany? Investment or Productivity Driven?," ZEW Discussion Papers 07-023, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Dionisius, Regina & Mühlemann, Samuel & Pfeifer, Harald & Walden, Günter & Wenzelmann, Felix & Wolter, Stefan C., 2008. "Cost and Benefit of Apprenticeship Training: A Comparison of Germany and Switzerland," IZA Discussion Papers 3465, Institute for the Study of Labor (IZA).
  5. Olaf H¸bler & Uwe Jirjahn, 2003. "Works Councils and Collective Bargaining in Germany: The Impact on Productivity and Wages," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(4), pages 471-491, 09.
  6. Jens Mohrenweiser & Thomas Zwick, 2008. "Why do Firms Train Apprentices? The Net Cost Puzzle Reconsidered," Economics of Education Working Paper Series 0016, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Oct 2008.
  7. Kessler, Anke & Lülfesmann, Christoph, 2000. "The Theory of Human Capital Revisited: On the Interaction of General and Specific Investments," CEPR Discussion Papers 2533, C.E.P.R. Discussion Papers.
  8. Wolter, Stefan C. & Ryan, Paul, 2011. "Apprenticeship," Handbook of the Economics of Education, Elsevier.
  9. repec:iab:iabmit:v:36:i:1:p:46-59 is not listed on IDEAS
  10. 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.
  11. 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.
  12. Harhoff, Dietmar & Kane, Thomas J., 1995. "Is the German apprenticeship system a panacea for the US labour market?," ZEW Discussion Papers 95-19, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  13. David Soskice, 1994. "Reconciling Markets and Institutions: The German Apprenticeship System," NBER Chapters, in: Training and the Private Sector: International Comparisons, pages 25-60 National Bureau of Economic Research, Inc.
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