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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).

PurposeWorks councils have the legal right to participate in a firm’s training process and, where necessary, call for a replacement of training instructors. The purpose of this paper is to empirically test whether works councils are associated with a higher quality of apprenticeship training – or its inputs or outputs – in Germany.Design/methodology/approachThe authors use two representative cross-sectional surveys of German workplaces in 2007 and 2012/2013 that were conducted by the Federal Institute for Vocational Education and Training in Germany. To account for selection on observables, the authors apply nearest neighbor matching models to estimate the extent to which works councils are associated with training quality.FindingsThe results shed light on the influence of works councils on the quality of apprenticeship training in Germany. Based on a quality model, the authors show that works councils are associated with a (moderately) higher output quality of apprenticeships, particularly with respect to the share of retained apprentices. However, the authors do not find empirical evidence for a positive association between works councils and input- and process-quality indicators.Research limitations/implicationsAlthough the identification of causal effects due to the existence of works councils is difficult and cannot be fully addressed in the analysis, the authors can use a number of important control variables at the workplace level. The results suggest that a works council only plays a moderate role in enhancing the quality of the German apprenticeship system.Originality/valueThe authors provide the first direct empirical evidence of how the existence of a works council is associated with the input-, process- and outcome-quality measures of the German apprenticeship system.

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.

In this article, we use workplace-level data to analyse the costs of filling an apprenticeship vacancy in Germany. We find that such recruitment costs amount on average to €600 per hire (almost one month’s pay of an apprentice or approximately 1–2 % of a workplace’s training expenditures), but costs are heterogeneous across workplaces and vary strongly by training occupation. Our results suggest that a high degree of competition among training workplaces in the region is associated with an increase in recruitment costs. Furthermore, we find that workplaces with a works council or an investment-oriented training strategy incur higher recruitment costs. Our results are important in light of the increasing competition for talented school leavers induced by demographic change.

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.

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.

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.

This article analyses how the costs of hiring skilled workers from the external labour market affect a firm’s supply of training. Using administrative survey data with detailed information on hiring and training costs for Swiss firms, we find evidence for substantial and increasing marginal hiring costs. However, firms can invest in internal training of unskilled workers and thereby avoid costs for external hiring. Controlling for a firm’s training investment, we find that a 1 standard deviation increase in average external hiring costs increases the number of internal training positions by more than half of a standard deviation.

Empirical research in vocational education and training 1 (2009) 2, S. 173-186, Dual apprenticeship training is a form of education at the upper secondary level, taking place in vocational school as well as in firms. Therefore, the willingness of firms to offer apprenticeships is a necessity for the functioning of this part of the educational system. Although it is likely that the economic climate has an impact on the firm’s supply of apprenticeships, little is known so far about the impact of the business cycle on the number of apprenticeship programs offered. Using panel-data of Swiss cantons from 1988–2004, we find that the influence of the business cycle is statistically significant, but small in size. Instead, supply of apprenticeship programs is driven to a much greater extent by demographic change. (DIPF/Orig.)

Switzerland is host to many international companies, and a large share of Swiss firms is exporting goods and services abroad. While the vocational education and training (VET) system in Switzerland has a long tradition, there is a paucity of studies investigating the effects of the ongoing internationalization on the training participation of internationalized firms. The empirical analysis uses representative cross-sectional survey data for Switzerland to estimate a firm’s training decision in 2009. I apply multivariate regression techniques to account for observable differences between domestic and internationalized firms. The results show that small and internationalized firms with less than 50 employees have a significantly lower training probability than comparable domestic firms, while this is not the case for larger firms – mainly because internationalized firms are too specialized and provide internal training to workers without a VET degree. Relating the results to the theory of the varieties of capitalism, I find no statistically significant differences in the training participation of similar-sized firms with headquarters in typical liberal market economies (United States, United Kingdom) and a coordinated market economy (Germany), stressing the importance of other factors such as location, sector, firm size, and the local labor market environment. While large internationalized firms show a similar training participation as domestic firms, a large fraction of small and internationalized firms does not offer apprenticeships even though they are aware of a potentially suitable training occupation. Thus policies promoting alternative forms of training, such as training networks that facilitate access to apprenticeship training for small and specialized firms, may possibly increase the future training participation of internationalized firms. J24; M51; M53