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Why do Firms Train? Empirical Evidence on the First Labour Market Outcomes of Graduate Apprentices

  • Euwals, Rob
  • Winkelmann, Rainer

The apprenticeship system is the most important source of formal post-secondary training in Germany. Our Paper contributes to the ongoing debate as to why firms are willing to invest in such training even though many apprentices will leave the training firm soon after completion of the apprenticeship. A particular advantage over previous empirical studies is that we use German register data, the IAB Employment Sample, which gives us a large sample size, and which gives us detailed information on occupations. We find that apprentices staying with their training firm after graduation have (1) higher wages and (2) longer first-job durations than apprentices leaving the training firm. These results support theories according to which firms use the apprenticeship system to select and retain the more able apprentices, thereby recouping the costs of investing in skills that are portable in principle.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2880.

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Date of creation: Jul 2001
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Handle: RePEc:cpr:ceprdp:2880
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  1. Daron Acemoglu & Jörn-Steffen Pischke, 1998. "Why Do Firms Train? Theory And Evidence," The Quarterly Journal of Economics, MIT Press, vol. 113(1), pages 78-118, February.
  2. Daron Acemoglu & Jorn-Steffen Pischke, 1999. "The Structure of Wages and Investment in General Training," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 539-572, June.
  3. 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.
  4. Wolfgang Franz & Joachim Inkmann & Winfried Pohlmeier & Volker Zimmermann, 2000. "Young and Out in Germany (On Youths? Chances of Labor Market Entrance in Germany)," NBER Chapters, in: Youth Employment and Joblessness in Advanced Countries, pages 381-426 National Bureau of Economic Research, Inc.
  5. Daron Acemoglu & Joern-Steffen Pischke, 1998. "Beyond Becker: Training in Imperfect Labor Markets," Working papers 98-12, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Winkelmann, Rainer & Zimmermann, Klaus F., 1998. "Is Job Stability Declining in Germany? Evidences from Count Data Models," IZA Discussion Papers 1, Institute for the Study of Labor (IZA).
  7. Damon Clark, 2001. "Why do German Firms Subsidize Apprenticeship Training?: Tests of the Asymmetric Information And Mobility Costs Explanation," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 70(1), pages 102-106.
  8. Wolfgang Franz & Joachim Inkmann & Winfried Pohlmeier & Volker Zimmermann, 1997. "Young and Out in Germany: On the Youths' Chances of Labor Market Entrance in Germany," NBER Working Papers 6212, National Bureau of Economic Research, Inc.
  9. Riphahn, Regina T., 1999. "Residential Location and Youth Unemployment: The Economic Geography of School-To-Work Transitions," IZA Discussion Papers 99, Institute for the Study of Labor (IZA).
  10. Wolfgang Franz & Volker Zimmermann, 1999. "Job Mobility after Apprenticeship Training in West Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 219(1+2), pages 143-164, July.
  11. A. Werwatz, 1996. "How firm-specific is German apprenticeship training?," SFB 373 Discussion Papers 1996,12, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  12. David G. Blanchflower & Richard B. Freeman, 2000. "Youth Employment and Joblessness in Advanced Countries," NBER Books, National Bureau of Economic Research, Inc, number blan00-1, October.
  13. Lancaster, Tony, 1979. "Econometric Methods for the Duration of Unemployment," Econometrica, Econometric Society, vol. 47(4), pages 939-56, July.
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