Welfare Effects of Penalty Charges to Firms that Do Not Offer Apprenticeship Training Positions
In Germany, there is currently a discussion about the implementation of penalty charges if firms refuse to offer apprenticeship training positions to school graduates. This paper aims at analyzing the policy instrument of penalty charges by a theoretical model that systematically compares its costs and benefits. Building on recent training literature, a two-period partialequilibrium model is designed that allows for worker heterogeneity in ability and covers special features of the German apprenticeship system. With respect to overall welfare, the implementation of penalty charges solves a trade-off. On the one hand, penalty charges increase the number of apprenticeship training positions and thus the fraction of trained workers in the workforce. On the other hand, some firms will leave the market to avoid the financial burden, which generates unemployment among workers with low ability. Altogether, we demonstrate that optimal penalty charges increase the overall welfare compared to the laissez-faire equilibrium if the productivity-enhancement of apprenticeship training exceeds some lower bound.
|Date of creation:||Jul 2006|
|Contact details of provider:|| Postal: Dufourstrasse 50, CH - 9000 St.Gallen|
Phone: +41 71 224 23 25
Fax: +41 71 224 31 35
Web page: http://www.seps.unisg.ch/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:usg:dp2006:2006-18. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joerg Baumberger)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.