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The effect of labor market regulations on training behavior and quality: the German labor market reform as a natural experiment

  • Anika Jansen

    (German Federal Institute for Vocational Education and Training (BiBB), Bonn)

  • Mirjam Strupler Leiser

    (University of Bern, Centre for Research in Economics of Education)

  • Felix Wenzelmann

    (German Federal Institute for Vocational Education and Training (BiBB), Bonn)

  • Stefan C. Wolter


    (University of Bern, CESifo & IZA)

Labor market frictions are seen in many extensions of the classical human capital theory as a prerequisite for firms financing general training. The labor market reforms in Germany at the beginning of the millennium have therefore been seen by many as a danger to the firms’ willingness to support the apprenticeship training system. This paper analyzes the training strategies German firms deployed to cope with the greater labor market flexibility as a result of the labor market reform. Switzerland where no reforms had taken place serves as the counterfactual. The results show that firms successfully reduced the net-costs of training by involving apprentices in more work and reducing non-productive tasks, like practicing. Contrary to the widespread fear, this adapted training strategy resulted also in a substantial increase in work-related competencies and productivity of apprentices.

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Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Economics of Education Working Paper Series with number 0083.

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Length: 24 pages
Date of creation: Dec 2012
Date of revision:
Handle: RePEc:iso:educat:0083
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  1. Acemoglu, D. & Pischki, J.S., 1996. "Why Do Firms Train? Theory and Evidence," Working papers 96-7, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Acemoglu, Daron & Pischke, Jörn-Steffen, 1998. "The Structure of Wages and Investment in General Training," CEPR Discussion Papers 1833, C.E.P.R. Discussion Papers.
  3. Muehlemann, Samuel & Pfeifer, Harald & Walden, Günter & Wenzelmann, Felix & Wolter, Stefan C., 2010. "The financing of apprenticeship training in the light of labor market regulations," Labour Economics, Elsevier, vol. 17(5), pages 799-809, October.
  4. Alberto Abadie & David Drukker & Jane Leber Herr & Guido W. Imbens, 2004. "Implementing matching estimators for average treatment effects in Stata," Stata Journal, StataCorp LP, vol. 4(3), pages 290-311, September.
  5. Daron Acemoglu & Jorn-Steffen Pischke, 1998. "Beyond Becker: Training in Imperfect Labor Markets," NBER Working Papers 6740, National Bureau of Economic Research, Inc.
  6. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
  7. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
  8. Samuel Muehlemann & Paul Ryan & Stefan C. Wolter, 2011. "Monopsony power, pay structure and training," Economics of Education Working Paper Series 0099, University of Zurich, Institute for Strategy and Business Economics (ISU).
  9. Regina Dionisius & Samuel Muehlemann & Harald Pfeifer & Günter Walden & Felix Wenzelmann & Stefan C. Wolter, 2008. "Cost and Benefit of Apprenticeship Training – A Comparison of Germany and Switzerland," CESifo Working Paper Series 2287, CESifo Group Munich.
  10. Danielle Venn, 2009. "Legislation, Collective Bargaining and Enforcement: Updating the OECD Employment Protection Indicators," OECD Social, Employment and Migration Working Papers 89, OECD Publishing.
  11. Marius R. Busemeyer & Renate Neubäumer & Harald Pfeifer & Felix Wenzelmann, 2012. "The transformation of the G erman vocational training regime: evidence from firms’ training behaviour," Industrial Relations Journal, Wiley Blackwell, vol. 43(6), pages 572-591, November.
  12. Muehlemann, Samuel & Wolter, Stefan C., 2011. "Firm-sponsored training and poaching externalities in regional labor markets," Regional Science and Urban Economics, Elsevier, vol. 41(6), pages 560-570.
  13. Edwin Leuven, 2005. "The Economics of Private Sector Training: A Survey of the Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 19(1), pages 91-111, 02.
  14. Wolter, Stefan C. & Ryan, Paul, 2011. "Apprenticeship," Handbook of the Economics of Education, Elsevier.
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