Financing Apprenticeship Training: Evidence from Germany

46 Pages Posted: 29 Dec 2003 Last revised: 16 Jun 2022

See all articles by Dietmar Harhoff

Dietmar Harhoff

Max Planck Institute for Innovation and Competition; Ludwig-Maximilians-Universität München; Centre for Economic Policy Research (CEPR)

Thomas J. Kane

University of California, Los Angeles (UCLA) - School of Public Policy & Social Research; National Bureau of Economic Research (NBER)

Date Written: December 1993

Abstract

Much of the current discussion promoting apprenticeship programs in the U.S. proceeds as if it is simply a matter of historical accident or lack of imagination which has hindered human capital investment by U.S. firms. However, the cause may be rooted more deeply in our labor market institutions. This paper discusses the structure of incentives undergirding the German system of apprenticeship training. Many German firms face large net costs of apprenticeship training. Yet they continue to provide such training in spite of considerable worker turnover upon completion of the training. The simplest human capital model suggests that employers would be willing to finance only firm-specific training. Rather than engage in a futile debate over the general or specific nature of the skills being provided, we first describe and evaluate 3 characteristics of the German labor market which may lead firms to accept part of the cost of general training even in the face of worker turnover. We then attempt to understand why German workers and firms may be more willing to invest even in firm-specific skills than in the U.S.. Finally, we discuss some implications of these results for the current vocational training debate in the U.S..

Suggested Citation

Harhoff, Dietmar and Kane, Thomas J., Financing Apprenticeship Training: Evidence from Germany (December 1993). NBER Working Paper No. w4557, Available at SSRN: https://ssrn.com/abstract=420304

Dietmar Harhoff

Max Planck Institute for Innovation and Competition ( email )

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Germany
+49 89 24246 550 (Phone)
+49 89 24246 599 (Fax)

HOME PAGE: http://www.ip.mpg.de

Ludwig-Maximilians-Universität München ( email )

Munich, 80539
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Thomas J. Kane (Contact Author)

University of California, Los Angeles (UCLA) - School of Public Policy & Social Research ( email )

Box 951656
Los Angeles, CA 90095
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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