Why Do Firms Train? Empirical Evidence on the First Labor Market Outcomes of Graduate Apprentices

38 Pages Posted: 31 Jul 2001

See all articles by Rob Euwals

Rob Euwals

CPB Netherlands Bureau of Economic Policy Research; IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

Rainer Winkelmann

University of Zurich - Statistics and Empirical Economic Research; IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

Date Written: July 2001

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. A particular advantage over previous empirical studies is that we use German register data, the IAB Employment Sample, which gives us a large sample size, and which gives us detailed information on occupations. 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.

Keywords: Training, wages, job-duration

JEL Classification: C24, C41, J24, J31, J44

Suggested Citation

Euwals, Rob and Winkelmann, Rainer, Why Do Firms Train? Empirical Evidence on the First Labor Market Outcomes of Graduate Apprentices (July 2001). Available at SSRN: https://ssrn.com/abstract=278165

Rob Euwals (Contact Author)

CPB Netherlands Bureau of Economic Policy Research ( email )

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IZA Institute of Labor Economics ( email )

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Centre for Economic Policy Research (CEPR)

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Rainer Winkelmann

University of Zurich - Statistics and Empirical Economic Research ( email )

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CH-8001 Zurich
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HOME PAGE: http://www.unizh.ch/sts/

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany
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+49 228 3894 510 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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