Job mobility and heterogeneous returns to apprenticeship training in Italy

Apprenticeship may provide an important opportunity to improve human capital and future earnings of young people, especially those with low levels of education. Based on new administrative data, we provide the first empirical evidence of the effect on wages and employability of the mobility across firms and economic sectors of apprentices after graduation in Italy. We use an instrumental variable approach to account for endogenous selection that is based on observed and unobserved characteristics when estimating the causal effects of mobility. Our main finding is that job switchers outside the economic sector of the training firm faced a considerable gap in wages and weeks worked in comparison to stayers in the training firm, indicating a loss of firm-specific human capital. In addition, the new apprenticeship introduced by the Biagi reform, which lessened the stringency of the norms on the training content delivered by firms, resulted in further reductions of the transferability of skills for trainees relative to the previous regime. Overall, the apprenticeship contract in Italy generated earning gaps according to the workers’ mobility after graduation,thus increasing inequality among similar employees.