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The Effect of Business Cycle Expectations on the German Apprenticeship Market: Estimating the Impact of COVID-19

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  • Mühlemann, Samuel

    (University of Munich)

  • Pfeifer, Harald

    (BIBB)

  • Wittek, Bernhard

    (LMU Munich)

Abstract

A firm's expectation about the future business cycle is an important determinant of the decision to train apprentices. As German firms typically train apprentices to either fill future skilled worker positions, or as a substitute for other types of labor, the current coronavirus crisis will have a strong and negative impact on the German economy according to the current business cycle expectations of German firms. To the extent that the training decision of a firm depends on its perception of the business cycle, we expect a downward shift in the firm's demand for apprentices and consequently also a decrease in the equilibrium number of apprenticeship contracts. We analyze German data on the apprenticeship from 2007 to 2019 and apply firstdifferences regressions to account for unobserved heterogeneity across states and occupations, allowing us to identify the association between changes in two popular measures of business cycle expectations (the ifo Business Climate Index and the ifo Employment Barometer) and subsequent changes in the demand for apprentices, the number of new apprenticeship contracts, unfilled vacancies and unsuccessful applicants. Taking into account the most recent data on business cycle expectations up to May 2020, we estimate that the coronavirus-related decrease in firms' expectations about the business cycle can be associated with a predicted 9% decrease in firm demand for apprentices and an almost 7% decrease in the number of new apprenticeship positions in Germany in 2020 (-34,700 apprenticeship contracts; 95% confidence interval: +/- 8,800).

Suggested Citation

  • Mühlemann, Samuel & Pfeifer, Harald & Wittek, Bernhard, 2020. "The Effect of Business Cycle Expectations on the German Apprenticeship Market: Estimating the Impact of COVID-19," IZA Discussion Papers 13368, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp13368
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    References listed on IDEAS

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    Cited by:

    1. Silke Anger & Malte Sandner & Alexander M. Danzer & Axel Plünnecke & Olaf Köller & Enzo Weber & Samuel Mühlemann & Harald Pfeifer & Bernhard Wittek, 2020. "Schulschließungen, fehlende Ausbildungsplätze, keine Jobs: Generation ohne Zukunft?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(09), pages 03-24, September.
    2. Caroline Neuber-Pohl & Damiano Pregaldini & Uschi Backes-Gellner & Sandra Dummert & Harald Pfeifer, 2023. "How negative labor supply shocks affect training in firms: Lessons from opening the Swiss-German border," Economics of Education Working Paper Series 0203, University of Zurich, Department of Business Administration (IBW), revised Nov 2023.
    3. José Manuel Santos-Jaén & Ana León-Gómez & Daniel Ruiz-Palomo & Francisca García-Lopera & María del Carmen Valls Martínez, 2022. "Exploring Information and Communication Technologies as Driving Forces in Hotel SMEs Performance: Influence of Corporate Social Responsibility," Mathematics, MDPI, vol. 10(19), pages 1-15, October.
    4. Guglielmo Ventura, 2020. "What future for apprenticeships after coronavirus?," CVER Briefing Notes 012, Centre for Vocational Education Research.
    5. Daniel Goller & Stefan C. Wolter, 2021. "“Too shocked to search” The COVID-19 shutdowns’ impact on the search for apprenticeships," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 157(1), pages 1-15, December.
    6. Bertoni Marco & Brunello Giorgio, 2022. "Training during recessions: recent European evidence," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 12(1), pages 1-17, January.

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    More about this item

    Keywords

    coronavirus; COVID-19; apprenticeship market; business cycle expectations;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

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