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The more they spend, the more I earn? Firms’ training investments and post-training wages of apprentices

Listed author(s):
  • Hans Dietrich

    (Institute for Employment Research (IAB), Nuremberg)

  • Harald Pfeifer

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

  • Felix Wenzelmann

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

In this paper, we examine the relation between a firm’s training investment and the post-training wages of apprenticeship graduates. For our analysis, we first calculate a training investment indicator using detailed information about firm-level training costs. We then merge the firm-level data with individual-level administrative data on employment and wages of apprenticeship graduates. Using regression models controlling for selection into employment, we find that a firm investment in training relates positively with graduates’ post-training wages. Doubling a firm’s training investment leads to a wage mark-up of about 2.8%. This result is robust to different specifications. However, we find that especially graduates from low-investment firms benefit from a higher training investment. The wage mark-up for graduates from firms with already high investment levels is small and statistically not significant.

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File URL: http://repec.business.uzh.ch/RePEc/iso/leadinghouse/0116_lhwpaper.pdf
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Paper provided by University of Zurich, Department of Business Administration (IBW) in its series Economics of Education Working Paper Series with number 0116.

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Length: 29 pages
Date of creation: Mar 2016
Handle: RePEc:iso:educat:0116
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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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  3. Wolter, Stefan C. & Ryan, Paul, 2011. "Apprenticeship," Handbook of the Economics of Education, Elsevier.
  4. 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.
  5. 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.
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  7. Hans Dietrich & Holger Alda & Harald Pfeifer & Felix Wenzelmann & Gudrun Schönfeld & Stefan Schiel & Stefan Seth, 2014. "Linked Employer-Employee Data on Firms’ Training Costs: Enriching Register based LEE Data with Firm Level Data on Apprenticeship Training," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 134(2), pages 237-248.
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  13. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, December.
  14. Bassanini, Andrea & Booth, Alison L. & Brunello, Giorgio & De Paola, Maria & Leuven, Edwin, 2005. "Workplace Training in Europe," IZA Discussion Papers 1640, Institute for the Study of Labor (IZA).
  15. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  16. Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-694, July.
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