Why Do Firms Train Apprentices? The Net Cost Puzzle Reconsidered

40 Pages Posted: 28 Mar 2008 Last revised: 15 May 2009

See all articles by Jens Mohrenweiser

Jens Mohrenweiser

affiliation not provided to SSRN

Thomas Zwick

University of Würzburg - Business Administration & Economics; Centre for European Economic Research (ZEW); Maastricht University - Research Centre for Education and the Labour Market (ROA)

Date Written: March 2008

Abstract

This paper investigates the short-term costs and benefits of apprenticeship training in Germany. It calls into question the popular stylised fact that apprenticeship training always leads to net costs during the apprenticeship period. We analyse the impact of the proportion of different occupational groups of apprentices on firm performance. We use representative matched employer-employee panel data that allow us to correct for different sources of estimation bias. We show that the proportion of apprentices in trade, commercial, craft and construction occupations has a direct positive impact on firm performance: the companies cover their training costs immediately. In contrast, companies with apprentices in the manufacturing occupations face net training costs during the apprenticeship period but gain by the long-term employment of its graduate apprentices.

Keywords: apprenticeship training, performance, panel data estimation

JEL Classification: C33, D24, J24

Suggested Citation

Mohrenweiser, Jens and Zwick, Thomas, Why Do Firms Train Apprentices? The Net Cost Puzzle Reconsidered (March 2008). ZEW - Centre for European Economic Research Discussion Paper No. 08-019. Available at SSRN: https://ssrn.com/abstract=1113713 or http://dx.doi.org/10.2139/ssrn.1113713

Jens Mohrenweiser (Contact Author)

affiliation not provided to SSRN ( email )

Thomas Zwick

University of Würzburg - Business Administration & Economics ( email )

Sanderring 2
Wuerzburg, D-97070
Germany

Centre for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

Maastricht University - Research Centre for Education and the Labour Market (ROA) ( email )

P.O. Box 616
Maastricht, MD6200
Netherlands

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