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The economic reasons why firms engage in apprenticeship training are twofold. First, apprenticeship training is a potentially cost-effective strategy for filling a firm’s future vacancies, particularly if skilled labor on the external labor market is scarce. Second, apprentices can be cost-effective substitutes for other types of labor in the current production process. As current and expected business and labor market conditions determine a firm’s expected work volume and thus its future demand for skilled labor, they are potentially important drivers of a firm’s training decisions. Empirical studies have found that the business cycle affects apprenticeship markets. However, while the economic magnitude of these effects is moderate on average, there is substantial heterogeneity across countries, even among those that at first sight seem very similar in terms of their apprenticeship systems. Moreover, identification of business cycle effects is a difficult task. First, statistics on apprenticeship markets are often less developed than labor market statistics, making empirical analyses of demand and supply impossible in many cases. In particular, data about unfilled apprenticeship vacancies and unsuccessful applicants are paramount for assessing potential market failures and analyzing the extent to which business cycle fluctuations may amplify imbalances in apprenticeship markets. Second, the intensity of business cycle effects on apprenticeship markets is not completely exogenous, as governments typically undertake a variety of measures, which differ across countries and may change over time, to reduce the adverse effects of economic downturns on apprenticeship markets. During the economic crisis related to the COVID-19 global pandemic, many countries took unprecedented actions to support their economies in general and reacted swiftly to introduce measures such as the provision of financial subsidies for training firms or the establishment of apprenticeship task forces. As statistics on apprenticeship markets improve over time, such heterogeneity in policy measures should be exploited to improve our understanding of the business cycle and its relationship with apprenticeships.

Purpose The purpose of this paper is to compare a firm’s net cost and post-apprenticeship benefits of providing apprenticeship training in Austria and Switzerland: two countries with many similarities but some critical institutional differences. Design/methodology/approach The authors draw on detailed workplace data with information on the costs and benefits of apprenticeship training, as well as on hiring costs for skilled workers from the external labour market. The authors use nearest-neighbour matching models to compare Austrian firms with similar Swiss firms based on observable characteristics. Findings On average, a Swiss firm generates an annual net benefit of €3,400 from training an apprentice, whereas a firm in Austria incurs net costs of €4,200. The impetus for this difference is largely a higher relative apprentice pay in Austria. However, compared with Swiss firms, Austrian firms generate a higher post-training return by retaining a higher share of apprentices and savings on future hiring costs. Practical implications The authors demonstrate that apprenticeship systems can exist under different institutional environments. For countries currently in the process of establishing or expanding apprenticeship systems, the comparative analysis clearly shows that policymakers should consider more than just one country’s particular apprenticeship model. Originality/value The authors provide a first comparative analysis between two apprenticeship countries that empirically assesses a firm’s costs and benefits of training during an apprenticeship programme and also provides a monetary value of a particular type of post-training benefits that firms can generate by retaining former apprentices as skilled workers (i.e. savings in future hiring costs for skilled workers).

We provide new empirical evidence on the magnitude and determinants of a firm’s hiring costs when filling a vacancy for skilled workers. In Switzerland, the average hiring costs amount to about 16 weeks of wage payments. The main components of hiring costs are post-match hiring costs, resulting from the initial low productivity and formal training needed for a new hire (53%), and disruption costs, resulting from the informal instruction of a new hire (26%). Pre-match hiring costs (i.e., search costs) account for just 21% of a firm’s hiring costs. Moreover, we find that search costs are positively associated with labor market tightness (i.e., the v/u ratio), both in the cross-section and over time. Our results will help to calibrate the hiring cost parameter in search models.

Purpose The purpose of this paper is to simulate the potential costs and benefits for Spanish firms providing dual apprenticeship training. Design/methodology/approach The paper conducts simulations of ten training occupations in six different industries in Spain. For these simulations, the authors combined Spanish wage data and the existing training curriculum regarding instruction times in vocational school in Spain with data from Swiss firms offering training in similar occupations. These data contain information regarding the amount of workplace training, relative apprentice productivity, and the relative importance of non-wage training costs (such as training equipment). Findings The authors found that training occupation, training scenario, and firm size are important determinants of the authors’ simulations for the expected net costs of apprenticeship training in Spanish firms. Consequently, the break-even level of apprentices’ wages differs significantly by training occupation and training scenario, suggesting that one prescribed apprentice wage for all sectors and occupations would be detrimental to the willingness of many firms to provide training places. Practical implications Dual apprenticeship training may improve the labor market transition for Spanish youth. The paper provides guidelines for regulatory frameworks that allow firms to provide apprenticeship training without having to bear net training costs – an important condition given that apprentices are free to leave the training firm upon graduation. Social implications The authors’ simulations show that Spanish firms would be able to provide high-quality apprenticeship training programs that would also appeal to more talented youth because of the combination of a decent earning opportunity during the apprenticeship and good future career options. Originality/value This paper provides novel and direct empirical evidence regarding the framework conditions within the Spanish apprenticeship system, thus incentivizing both firms and individuals to participate in dual apprenticeship training programs.

In countries with an apprenticeship system, training firms typically make a significant investment in general human capital of apprentices in addition to paying an apprentice wage, even though such training contracts are limited for the duration of the apprenticeship period. While a firm’s training costs may be offset by the productive value of apprentices during the training period, firms may also recoup their initial investment by retaining apprentices as skilled workers after graduation. From an individual perspective, high-quality apprenticeship training may be a viable alternative to general education, as direct educational expenditures, and opportunity costs in particular, are lower compared to school-based programs, while lifetime earnings may be equally high. Focusing on apprenticeship training, we discuss the main factors that affect the training decision of firms and individuals, as well as the role of the state. Moreover, we review the recent empirical literature on the relevant economic outcomes of apprenticeship training programs.

The author discusses the success of the Swiss system of apprenticeships. The famous German apprenticeship system requires that firms make an investment in their students, he writes, but the interesting Swiss system makes it possible to recoup such investments by the end of the training period without substantial state aid. High training standards contribute to a significant return on their education for apprentices.

This paper analyzes the structure of hiring costs of skilled workers in Germany. Using detailed and representative firm-level data on recruitment and adaptation costs of new hires, we find that average hiring costs amount to more than 8 weeks of wage payments (€4700). The structure of hiring costs is convex, as an increase in the number of hires by 1 percent increases hiring costs by 1.3 percent. We find moderate effects of labor market institutions on the magnitude but none on the structure of hiring costs. Furthermore, we provide evidence in favor of monopsony power in the German labor market.

In this paper, we investigate the effects of works councils on apprenticeship training in Germany. The German law attributes works councils substantial information and co-determination rights to training-related issues. Thus, works councils may also have an impact on the cost-benefit relation of workplace training. Using detailed firm-level data containing information on the costs and benefits of apprenticeship training, we find that firms with works councils make a significantly higher net investment in training compared to firms without such an institution. We also find that the fraction of former trainees still employed with the same firm 5 years after training is significantly higher in the presence of works councils, thus enabling firms to recoup training investments over a longer time horizon. Furthermore, all works council effects are much more pronounced for firms covered by collective bargaining agreements.

PurposeThe paper aims to test whether a firm's provision of training depends on the intake quality of trainees. While a firm may just treat each trainee equally, independent of his or her intake quality, firms may alternatively also provide more training to less able individuals or focus on the most able ones. The authors develop a theoretical framework that illustrates under what circumstances a firm chooses a particular training strategy.Design/methodology/approachThe paper uses representative administrative survey data for more than 1,400 Swiss establishments. To test their theoretical predictions about a firm's training strategy, the authors apply multivariate and instrumental variable (IV) regression models. In addition, they use case study evidence from a large Swiss retailer, allowing them to analyze how different instructors in a specific firm react when confronted with apprentices of different intake qualities.FindingsThe authors find that a firm's training strategy depends on a trainee's intake quality and the expected net costs of a particular training occupation. Although firms generally provide less training to less qualified trainees, the authors find that a firm is willing to compensate low‐ability trainees with additional training when training is on average profitable in the short run.Practical implicationsWhen training regulations force firms to follow an investment‐oriented training strategy (net costs in the short run), then low‐ability trainees will not receive additional instruction time and the dropout risk increases.Social implicationsGenerating a regulatory framework that allows firms to achieve a net benefit from work‐based training is crucial for low‐ability trainees to have the opportunity to receive additional training investments that compensate for a lack of competences when training commences.Originality/valueThis paper provides novel and direct empirical evidence on how firms adjust their training provision when faced with heterogeneity in the ability of their trainees.

Although interest in monopsonistic influences on labour market outcomes has revived in recent years, only a few empirical studies provide direct evidence on it. This paper analyses empirically the effect of monopsony power on pay structure, using a direct measure of labour market 'thinness'. We find that having fewer competitors for skilled labour is associated at the level of the establishment with lower pay for both skilled labour and trainees, but not for unskilled labour. These findings have potentially important implications for the economic theory of training, as most recent models assume that skilled pay is set monopsonistically but both unskilled and trainee pay are determined competitively. Our results support those assumptions for skilled pay and unskilled pay, but not for trainee pay.

A firm's decision to invest in the general human capital of its workers can be affected by labor market conditions. Firms located close to a large number of competitors might refrain from financing general training because skilled workers may be poached after completion of training. To better incorporate economic realities, we apply a novel definition of regional labor markets based on travel time rather than travel distance or political borders. Our results show that firms provide less training in dense regional labor markets, indicating that (potential) labor poaching affects the training behavior of firms. Moreover, the threat of poaching is relevant only if general training is financed by the employer.

In this paper we analyze the training behavior of firms in Germany and Switzerland — two countries with a comparable apprenticeship system but strong differences in the regulation of their respective labor markets. We make use of two representative firm-level surveys on the provision of apprenticeship training to analyze differences in the costs and benefits of training and the firm's training decision. Our results suggest that firms are more likely to make a substantial (short-term) net investment in apprenticeship training in the presence of strong employment protection laws.

For the first time it has been made possible to merge a German and a Swiss firm-level data set that include detailed information about costs and benefits of apprenticeship training. Previous analyzes based only on aggregate data showed that the net costs of training apprentices are substantial in Germany, whereas apprenticeship training is on average profitable during the training period for firms in Switzerland, even though the two training systems are rather similar. This paper analyzes the reasons for these differences with matching methods. We simulate the impact of changes in certain parameters such as wages, apprenticeship system-related factors and allocation of tasks to apprentices on the cost-benefit ratio using the counterfactual values of the other country. The results show that most of the difference in the net costs of training between the two countries can be explained by a higher share of productive tasks allocated to apprentices in Switzerland and the differences in relative wages...

A firm’s decision to engage in apprenticeship training is to a large extent determined by the cost-benefit ratio of such an investment compared to other alternatives of securing skilled workers. Empirical evidence shows that in a well-functioning apprenticeship training system, a large share of training firms can recoup their training investments by the end of the training period. As training firms often succeed in retaining the most suitable apprentices, offering apprenticeships is an attractive strategy to recruit their future skilled work force. In addition – as long as skills are standardised and nationally certified – those apprentices leaving the training firm after graduation ensure that other firms can recruit a sufficient number of skilled workers from the labour market. Firms themselves can influence the cost-benefit ratio of training to some extent, but an equally important or even bigger part of this ratio is determined by public policy: the educational system, training regulations and labour market institutions. To assess the efficacy and efficiency of such framework conditions in regard to the apprenticeship training system, their impact on the cost-benefit ratio of training for firms needs to be assessed ex ante as well as ex post. Unfortunately, so far only two countries (Germany and Switzerland) provide representative and periodic data on the costs and benefits of apprenticeship training that are suitable for such an analysis. Given the importance of adequate data to guide public policy, there is first of all a need for a stronger investment in data collection and data analyses. JEL-Codes I2, J24, J31.

In this paper, we use firm-level data to analyse a firm's costs of recruiting apprentices in Germany. We find that recruitment costs amount on average to 600 Euros per hire (approximately one month of apprentice pay or 1-2 per cent of a firm’s training expenditures), but costs are heterogeneous across firms and vary strongly with the training occupation. Our results suggest that shortages in the local supply of apprentices and a high degree of competition among training firms in the region increase recruitment costs. Furthermore, we find that firms with a works council or an investment-oriented training strategy incur higher recruitment costs. Finally, marginal recruitment costs first increase but eventually decrease for firms hiring a large number of apprentices. Our results are important in light of the increasing firm competition for talented school leavers induced by demographic change.

Die Schweiz ist wirtschaftlich stark mit dem Ausland verflochten und attraktiv fuer internationale Unternehmen. Ueber die Einfluesse der Internationalisierung auf die arbeitsmarktorientierte Bildung (hoehere Berufsbildung, Berufslehre) in der Schweiz gibt es jedoch bisher kaum empirische Grundlagen. Basierend auf den drei Erhebungen zu den Kosten und Nutzen der beruflichen Grundbildung in der Schweiz kann das Verhalten von 2500 internationalisierten Betrieben hinsichtlich der arbeitsmarktorientierten Bildung im Zeitraum von 2000 bis 2009 untersucht und mit 15000 einheimischen Betrieben verglichen werden. ZusŠtzlich wurden im Rahmen dieses Projekts persoenliche Interviews mit Personal- und Ausbildungsverantwortlichen gefuehrt um das Ausbildungs- und Rekrutierungsverhalten von internationalisierten Betrieben besser zu verstehen. Die Resultate dieser Forschungsarbeit zeigen, dass internationalisierte Betriebe mit weniger als 50 Beschaeftigten einen kleineren Anteil Beschaeftigter mit einer arbeitsmarktorientierten Bildung, und auch eine geringere Ausbildungsbeteiligung in der beruflichen Grundbildung aufweisen als aehnliche Schweizer Betriebe. Ufer internationalisierte Betriebe mit mehr als 50 Beschaeftigten koennen hingegen keine signifikanten Unterschiede festgestellt werden. Internationalisierte Betriebe bilden im Vergleich zu einheimischen Betrieben vor allem deshalb weniger oft Lernende aus, weil sie aufgrund ihrer Spezialisierung nicht alle Ausbildungsinhalte vermitteln koennen, oder ihr Fachkraeftebedarf durch die Weiterbildung des vorhandenen Personals ohne Berufsausbildung gedeckt wird. Ausbildende internationalisierte Betriebe unterscheiden sich jedoch nicht signifikant von einheimischen Betrieben hinsichtlich ihrer Ausbildungsintensitaet, dem Kosten-Nutzen-Verhaeltnis der beruflichen Grundbildung sowie dem Anteil der Lernenden, die nach der Ausbildung im Betrieb weiterbeschaeftigt werden.

For the first time it has been made possible to merge a German and a Swiss firm-level data set that include detailed information about costs and benefits of apprenticeship training. Previous analyzes based only on aggregate data showed that the net costs of training apprentices are substantial in Germany, whereas apprenticeship training is on average profitable during the training period for firms in Switzerland, even though the two training systems are rather similar. This paper analyzes the reasons for these differences with matching methods. We simulate the impact of changes in certain parameters such as wages, apprenticeship system-related factors and allocation of tasks to apprentices on the cost-benefit ratio using the counterfactual values of the other country. The results show that most of the difference in the net costs of training between the two countries can be explained by a higher share of productive tasks allocated to apprentices in Switzerland and the differences in relative wages.

This paper uses regional variation in labor markets, the industry structure and the educational system to explain the training decisions of firms. Using a representative firm-level data set, the results show that firms are less likely to offer training if the number of competing firms situated in the same geographical area is high. Furthermore, the supply of potential apprentices affects the training decision positively through an improved matching process. In addition, the expected ability of apprentices also has a positive impact, whereas a more developed system of full-time schooling options for school leavers reduces the likelihood of a firm to offer training.

It is a widely held belief that apprenticeship training represents a net investment for training firms, the cost of which needs to be recouped after the training period. A new firm-level data set for Switzerland reveals large variation in net costs across firms and, remarkably, negative net costs for 60 per cent of all firms. We use these data to estimate the effect of net costs on the number of apprentices hired by a firm. The results show that the costs have a significant impact on the training decision but no significant influence on the number of apprentices, once the firm has decided to train. For policy purposes, these results indicate that subsidies for firms that already train apprentices would not boost the number of available training places.