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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).

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.

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.

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.

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.