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Costs of training and the demand for apprentices

Author

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  • Luis E. Arango
  • Leonardo Bonilla-Mejía
  • Luz A. Flórez

Abstract

In this paper, we show that an increase in apprenticeship wages reduces the demand for apprentices. We exploit a natural experiment that provides exogenous variation in apprenticeship wages combined with discontinuities in the eligibility criteria (firms with fewer than 15 employees are not required to train apprentices). Our main results, based on difference-in-discontinuity methods, indicate that increasing apprenticeship wages from 75% to 100% of the national minimum wage leads to a reduction in the demand for apprentices of 83% in non-eligible firms. The intensive margin analysis, which compares the number of apprentices observed for firms with their regulatory target, shows that the rise in training costs also reduces the demand for apprentices in eligible firms. The impact is considerable for large firms (over 250 employees) and for firms that pay low wages, with estimated effects of 28.8% and 48.2%, respectively. **** RESUMEN: En este artículo mostramos que el aumento del salario (apoyo de sostenimiento) de los aprendices reduce su demanda por parte de las firmas. Aprovechamos un experimento natural en Colombia que proporciona la variación exógena en el salario de los aprendices combinada con discontinuidades en los criterios de elegibilidad (las empresas con menos de 15 empleados no están obligadas a capacitar aprendices). Nuestros principales resultados, basados en métodos de diferencia en discontinuidad, indican que incrementar el salario de los aprendices del 75% al 100% del salario mínimo nacional conduce a una reducción de la demanda de aprendices del 83% en las empresas no obligadas a capacitar aprendices. El análisis del margen intensivo, que compara los aprendices observados de las empresas con su objetivo regulatorio (número de aprendices esperados), muestra que el aumento de los costos de capacitación también reduce la demanda de aprendices en las empresas obligadas. El impacto es particularmente alto en las empresas grandes (más de 250 empleados) y las empresas con salarios bajos, con efectos estimados de 28,8% y 48,2%, respectivamente.

Suggested Citation

  • Luis E. Arango & Leonardo Bonilla-Mejía & Luz A. Flórez, 2025. "Costs of training and the demand for apprentices," Borradores de Economia 1312, Banco de la Republica de Colombia.
    • Handle: RePEc:bdr:borrec:1312
    DOI: 10.32468/be.1312
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    More about this item

    Keywords

    Demand for apprentices; sustaining support; on-the-job training; human capital accumulation; Demanda de aprendices; apoyo de sostenimiento de aprendices; entrenamiento; acumulación de capital humano;
    All these keywords.

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

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