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Spillovers in Vocational Training


  • Bornemann, Stefan


The German apprenticeship system is often considered a role model for vocational education. Its influence on economic growth and technological progress through the provision of human capital to the workforce is widely acknowledged. But recent declines in the number of apprenticeships have led to increasing unrest among policy makers. To counter this development, the government is considering to introduce a training levy scheme that collects training levies from non-training firms in order to subsidize apprenticeship training ("Ausbildungsplatzabgabe"). Such training levy schemes already exist in several industrialized countries and even in some sectors in Germany. Yet, economists differ greatly in opinion about this policy. More surprisingly, however, a general economic analysis of this policy instrument is still lacking. Recent contributions have relied on rather qualitative and partial analyses. This paper aims at closing this gap. Following the training literature, we use a simple oligopsonistic labor market model. Such a setting allows to explain why firms provide and (at least partially) finance general vocational training. Moreover, it can demonstrate that a positive externality arises as other firms benefit from vocational training through poaching. In principle, the Pigouvian prescription of a subsidy scheme financed by a non-distortionary tax could restore the social optimum. The proposed training levy scheme, by contrast, is a particular scheme that links subsidies and levies. This paper unveils that it basically corresponds to a uniform subsidy on apprenticeship training that is financed by a distortionary tax on labor. We show that introducing such a levy scheme can entail ambiguous repercussions on general welfare.

Suggested Citation

  • Bornemann, Stefan, 2005. "Spillovers in Vocational Training," Discussion Papers in Economics 693, University of Munich, Department of Economics.
  • Handle: RePEc:lmu:muenec:693

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    References listed on IDEAS

    1. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1-9.
    2. Rainer Winkelmann, 1997. "How young workers get their training: A survey of Germany versus the United States," Journal of Population Economics, Springer;European Society for Population Economics, vol. 10(2), pages 159-170.
    3. Gersbach, Hans & Schmutzler, Armin, 2001. "A Product Market Theory of Worker Training," IZA Discussion Papers 327, Institute for the Study of Labor (IZA).
    4. Stevens, Margaret, 1999. "Human Capital Theory and UK Vocational Training Policy," Oxford Review of Economic Policy, Oxford University Press, vol. 15(1), pages 16-32, Spring.
    5. Edward P. Lazear, 2003. "Firm-Specific Human Capital: A Skill-Weights Approach," NBER Working Papers 9679, National Bureau of Economic Research, Inc.
    6. Katz, Eliakim & Ziderman, Adrian, 1990. "Investment in General Training: The Role of Information and Labour Mobility," Economic Journal, Royal Economic Society, vol. 100(403), pages 1147-1158, December.
    7. Falkinger, Josef, 1996. "Efficient private provision of public goods by rewarding deviations from average," Journal of Public Economics, Elsevier, vol. 62(3), pages 413-422, November.
    8. Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-562, October.
    9. Kevin Lang, 1991. "Persistent Wage Dispersion and Involuntary Unemployment," The Quarterly Journal of Economics, Oxford University Press, vol. 106(1), pages 181-202.
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    More about this item


    Vocational Training; Frictional Labor Markets; Poaching; Levy-Grant-Scheme; Training levy;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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