The Costs of Recruiting Apprentices: Evidence from German Firm-Level Data

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.