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Returns to Apprenticeship Training in Austria: Evidence from Failed Firms

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Listed author(s):
  • Josef Fersterer
  • Jörn-Steffen Pischke

Abstract

Little is known about the payoffs to apprenticeship training in the German speaking countries for theparticipants. OLS estimates suggest that the returns are similar to those of other types of schooling. However, there is a lot of heterogeneity in the types of apprenticeships offered, and institutional descriptions suggest that there might be an important element of selection in who obtains an apprenticeship, and what type. In order to overcome the resulting ability bias we estimate returns to apprenticeship training for apprentices in failed firms in Austria. When a firm fails, current apprentices cannot complete their training in this firm. Because apprentices will be at different stages in their apprenticeship at that time, the failure of a firm will manipulate the length of the apprenticeship period completed for some apprentices. The time to the firm failure therefore serves as an instrument for the length of the apprenticeship completed both at the original firm and at otherfirms. We find instrumental variables returns which are similar or larger than the OLS returns in our sample, indicating relatively little selection.

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File URL: http://cee.lse.ac.uk/ceedps/ceedp88.pdf
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Paper provided by Centre for the Economics of Education, LSE in its series CEE Discussion Papers with number 0088.

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Date of creation: Feb 2008
Handle: RePEc:cep:ceedps:0088
Contact details of provider: Web page: http://cee.lse.ac.uk/publications.htm

Keywords: Human capital; returns to schooling; firm-based training; ability bias;

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Find related papers by JEL classification:
  • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
  • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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  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.
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