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The Costs of Recruiting Apprentices: Evidence from German Firm-Level Data

Author

Listed:
  • Samuel Muehlemann

    (Ludwig-Maximilians-Universitaet Muenchen & IZA Bonn)

  • Harald Pfeifer

    (Federal Institute for Vocational Education and Training (BIBB) Bonn & Research Centre for Education and the Labour Market (ROA) Maastricht)

  • Felix Wenzelmann

    (Federal Institute for Vocational Education and Training (BIBB) Bonn)

Abstract

In this paper, we use firm-level data to analyse a firm's costs of recruiting apprentices in Germany. We find that recruitment costs amount on average to 600 Euros per hire (approximately one month of apprentice pay or 1-2 per cent of a firm’s training expenditures), but costs are heterogeneous across firms and vary strongly with the training occupation. Our results suggest that shortages in the local supply of apprentices and a high degree of competition among training firms in the region increase recruitment costs. Furthermore, we find that firms with a works council or an investment-oriented training strategy incur higher recruitment costs. Finally, marginal recruitment costs first increase but eventually decrease for firms hiring a large number of apprentices. Our results are important in light of the increasing firm competition for talented school leavers induced by demographic change.

Suggested Citation

  • Samuel Muehlemann & Harald Pfeifer & Felix Wenzelmann, 2013. "The Costs of Recruiting Apprentices: Evidence from German Firm-Level Data," Economics of Education Working Paper Series 0095, University of Zurich, Department of Business Administration (IBW), revised Nov 2015.
    • Handle: RePEc:iso:educat:0095
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    References listed on IDEAS

    as
    1. Manning, Alan, 2011. "Imperfect Competition in the Labor Market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 11, pages 973-1041, Elsevier.
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    3. Marc Blatter & Samuel Muehlemann & Samuel Schenker & Stefan C. Wolter, 2016. "Hiring costs for skilled workers and the supply of firm-provided training," Oxford Economic Papers, Oxford University Press, vol. 68(1), pages 238-257.
    4. Blatter, Marc & Muehlemann, Samuel & Schenker, Samuel, 2012. "The costs of hiring skilled workers," European Economic Review, Elsevier, vol. 56(1), pages 20-35.
    5. Mühlemann, Samuel & Wolter, Stefan C. & Wüest, Adrian, 2009. "Apprenticeship Training and the Business Cycle," IZA Discussion Papers 4460, Institute of Labor Economics (IZA).
    6. Uschi Backes-Gellner & Simone N. Tuor, 2010. "Avoiding Labor Shortages by Employer Signaling: On the Importance of Good Work Climate and Labor Relations," ILR Review, Cornell University, ILR School, vol. 63(2), pages 271-286, January.
    7. Stevens, Margaret, 1994. "An Investment Model for the Supply of Training by Employers," Economic Journal, Royal Economic Society, vol. 104(424), pages 556-570, May.
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    9. Alan Manning, 2006. "A Generalised Model of Monopsony," Economic Journal, Royal Economic Society, vol. 116(508), pages 84-100, January.
    10. Ben Kriechel & Samuel Muehlemann & Harald Pfeifer & Miriam Schuette, 2011. "Works councils, collective bargaining and apprenticeship training," Economics of Education Working Paper Series 0057, University of Zurich, Department of Business Administration (IBW).
    11. Lindley, Robert M, 1975. "The Demand for Apprentice Recruits by the Engineering Industry, 1951-71," Scottish Journal of Political Economy, Scottish Economic Society, vol. 22(1), pages 1-24, February.
    12. Colm Harmon & Hessel Oosterbeek & Ian Walker, 2003. "The Returns to Education: Microeconomics," Journal of Economic Surveys, Wiley Blackwell, vol. 17(2), pages 115-156, April.
    13. Samuel Muehlemann & Romy Braendli & Stefan C. Wolter, 2013. "Invest in the best or compensate the weak? An empirical analysis of the heterogeneity of a firm's provision of human capital," Economics of Education Working Paper Series 0086, University of Zurich, Department of Business Administration (IBW).
    14. Dube, Arindrajit & Freeman, Eric & Reich, Michael, 2010. "Employee Replacement Costs," Institute for Research on Labor and Employment, Working Paper Series qt7kc29981, Institute of Industrial Relations, UC Berkeley.
    15. Heineck, Guido & Kleinert, Corinna & Vosseler, Alexander, 2011. "Regionale Typisierung: Was Ausbildungsmärkte vergleichbar macht," IAB-Kurzbericht 201113, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
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    Cited by:

    1. Pfann, Gerard & Muehlemann, Samuel & Pfeifer, Harald & Dietrich, Hans, 2018. "Supply Shocks in the Market for Apprenticeships: Evidence from a German High School Reform," CEPR Discussion Papers 12669, C.E.P.R. Discussion Papers.
    2. Muehlemann, Samuel & Dietrich, Hans & Pfann, Gerard & Pfeifer, Harald, 2022. "Supply Shocks in the Market for Apprenticeship Training," Economics of Education Review, Elsevier, vol. 86(C).
    3. Harald Pfeifer & Uschi Backes-Gellner, 2017. "Another piece of the puzzle: Firms' investment in training as optimization of skills inventory," Economics of Education Working Paper Series 0136, University of Zurich, Department of Business Administration (IBW), revised Jun 2018.
    4. Stockinger, Bastian & Zwick, Thomas, 2016. "Apprentice Poaching in Regional Labor Markets," VfS Annual Conference 2016 (Augsburg): Demographic Change 145565, Verein für Socialpolitik / German Economic Association.
    5. Uschi Backes-Gellner, 2014. "Benefits of Apprenticeship Training and Recent Challenges - Empirical Results and Lessons from Switzerland and Germany," Economics of Education Working Paper Series 0097, University of Zurich, Department of Business Administration (IBW).
    6. Mühlemann, Samuel & Pfann, Gerard A. & Pfeifer, Harald & Dietrich, Hans, 2018. "The Effects of Supply Shocks in the Market for Apprenticeships: Evidence from a German High School Reform," IZA Discussion Papers 11264, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Recruitment costs; apprenticeship training; human capital investment; local labour markets; local training markets; demographic change;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

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