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Why Do Firms Train? Empirical Evidence on the First Labour Market Outcomes of Graduated Apprentices

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  • Euwals, Rob

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Winkelmann, Rainer

    (University of Zurich)

Abstract

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. Using German register data - the IAB Employment Sample - 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.

Suggested Citation

  • Euwals, Rob & Winkelmann, Rainer, 2001. "Why Do Firms Train? Empirical Evidence on the First Labour Market Outcomes of Graduated Apprentices," IZA Discussion Papers 319, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp319
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    1. Daron Acemoglu & Jörn-Steffen Pischke, 1998. "Why Do Firms Train? Theory and Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(1), pages 79-119.
    2. Franz Wolfgang & Zimmermann Volker, 1999. "Mobilität nach der beruflichen Erstausbildung: Eine empirische Studie für Westdeutschland / Job Mobility after Apprenticeship Training in West Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 219(1-2), pages 143-164, February.
    3. 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.
    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.
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    6. Acemoglu, Daron & Pischke, Jorn-Steffen, 1999. "Beyond Becker: Training in Imperfect Labour Markets," Economic Journal, Royal Economic Society, vol. 109(453), pages 112-142, February.
    7. Thomas J. Kane & Dietmar Harhoff, 1997. "Is the German apprenticeship system a panacea for the U.S. labor market?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 10(2), pages 171-196.
    8. Werwatz, A., 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.
    9. Rainer Winkelmann & Klaus Zimmermann, 1998. "Is job stability declining in Germany? Evidence from count data models," Applied Economics, Taylor & Francis Journals, vol. 30(11), pages 1413-1420.
    10. 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.
    11. 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.
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    Cited by:

    1. Stefan Bender & Till von Wachter, 2006. "In the Right Place at the Wrong Time: The Role of Firms and Luck in Young Workers' Careers," American Economic Review, American Economic Association, vol. 96(5), pages 1679-1705, December.
    2. Jérémy Hervelin, 2025. "Firm retention and productivity of apprentices," Empirical Economics, Springer, vol. 68(3), pages 1265-1280, March.
    3. Anette Boom, "undated". "Firms' Investments in General Training and the Market for Skilled Labour," Papers 013, Departmental Working Papers.
    4. Beckmann, Michael, 2002. "Lohnstrukturverzerrung und betriebliche Ausbildung : empirische Analyse des Acemoglu-Pischke-Modells mit Daten des IAB-Betriebspanels (Wage structure bias and company training : empirical analysis of ," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 35(2), pages 189-204.
    5. Korpi, Tomas & Mertens, Antje, 2002. "Training systems and labor mobility: A comparison between Germany and Sweden," SFB 373 Discussion Papers 2002,19, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    6. Zwick, Thomas, 2007. "Apprenticeship training in Germany - investment or productivity driven?," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 40(2/3), pages 193-204.
    7. Andrew Sharpe & James Gibson, 2005. "The Apprenticeship System in Canada: Trends and Issues," CSLS Research Reports 2005-04, Centre for the Study of Living Standards.
    8. Regula Geel & Johannes Mure & Uschi Backes-Gellner, 2011. "Specificity of occupational training and occupational mobility: an empirical study based on Lazear’s skill-weights approach," Education Economics, Taylor & Francis Journals, vol. 19(5), pages 519-535, January.
    9. Gersbach, Hans & Schmutzler, Armin, 2005. "The Effects of Globalization on Worker Training," CEPR Discussion Papers 4879, C.E.P.R. Discussion Papers.
    10. Beckmann, Michael, 2002. "Lohnstrukturverzerrung und betriebliche Ausbildung : empirische Analyse des Acemoglu-Pischke-Modells mit Daten des IAB-Betriebspanels (Wage structure bias and company training : empirical analysis of ," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 35(2), pages 189-204.
    11. Zwick, Thomas, 2007. "Apprenticeship training in Germany - investment or productivity driven?," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 40(2/3), pages 193-204.
    12. Zwick, Thomas, 2007. "Apprenticeship training in Germany - investment or productivity driven?," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 40(2/3), pages 193-204.
    13. Clark, Damon, 2002. "Matching, Screening and Firm Investment in General Training: Theory and Evidence," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 A2-4, International Conferences on Panel Data.

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    JEL classification:

    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations

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