Good Occupation - Bad Occupation? The Quality of Apprenticeship Training

Abstract

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp09024.pdf Nontechnical summaryThis paper measures the quality of apprenticeship training by comparing the wage difference between apprentices who change their employer or occupation directly after the training period with apprentices who stay in the training firm and their occupation. It tests empirically which individual, occupation, and employer characteristics have an impact on these differences. A little wage advantage for those who change their employer after the apprenticeship training is an indication that the German dual apprenticeship training system provides generally usable human capital. There are small average wage losses for occupation changers who do not simultaneously change their employer. In general, a change of occupation does not have a wage impact. These average effects mask large differences by occupation groups, however. For apprentices in commerce and trading occupations, changing the employer is associated with a large positive wage mark-up. Apprentices in industrial occupations suffer from wage disadvantages when they have to change their employer or occupation. These results support the findings that industrial occupations are relatively specific and establishments that offer industrial occupations invest in apprenticeship training, try to keep their apprentices after the training period and offer attractive internal labour markets. Apprentices with an upper secondary education who change their employer get a higher wage mark-up than the stayers -this indicates that better qualified apprentices are privileged because they have the interesting outside option to acquire an academic qualification. The distinction between occupation groups and apprentices with different schooling back-grounds is new. The previous literature mainly concentrates on differences in economic sectors and firm size. We do not find large wage differences for occupation and/or employer changers in East-Germany, between the manufacturing and services sectors or from an apprenticeship training establishment which is smaller than the first skilled employer, however.A series of robustness checks demonstrates that occupation selection, the decision to change the employer and/or occupation, unobserved heterogeneity between apprentices, and the homogeneity of the sample regarded all have a strong impact on the estimation results. This indicates that previous results might be biased. ...

How Acid are Lemons? Adverse Selection and Signalling for Skilled Labour Market Entrants

“…This wage reduction is comparable to other relevant studies (von Wachter & Bender, 2006;Göggel & Zwick, 2009). …”

“…Observable individual characteristics such as age, educational background, as well as the grades of the apprenticeship exam serve as signals for the hiring firm and drive entry wages of employer stayers and movers (Acemoglu & Pischke, 1998;Göggel & Zwick, 2009;Wydra-Somaggio et al, 2010). Relatively old job applicants might signal problems in school because they had to repeat a class or needed additional schooling in an occupation school after general school (Übergangssystem) before they could start with their apprenticeship.…”

“…19 We implement this approach in our estimation strategy in order to test the robustness of our estimates in the previous section. As we focus on the group of employer movers, we do not have an employer changer dummy and therefore cannot apply an instrumental variable approach to take into account the endogeneity of the decision to leave 19 Göggel & Zwick (2009) argue that a mass lay-off during the last half a year in the apprenticeship also can be used as an instrument for an employer change. This instrument indeed highly correlates with the likelihood of an involuntary employer change and arguably has no relationship to graduates' innate abilities.…”

“…The majority of studies examining the mover-stayer wage differential of apprenticeship graduates however findslowerentry wages for employer movers and explains the result by adverse selection (Acemoglu & Pischke, 1998;Dustmann et al, 1997;Bougheas & Georgellis, 2004).The studies by von Wachter & Bender (2006) and Göggel & Zwick (2009) show that taking into account the endogeneity of the separation decision increases the mover-stayer wage differential. They estimate a local average treatment effect for subgroupsof apprenticeship graduates who move because of (mainly) exogenous reasons.…”

Labour Market Entry Conditions, Wages and Job Mobility

“…8 Following Goeggel and Zwick (2009), who analyze the job and wage mobility behaviour of German apprentices, we further use a mass-layoff indicator as an instrument for the probability of involuntary job mobility. Using the establishment size reported in the IABS data set, we define mass layoffs as an annual reduction of the establishment's labour force by more than 30 percent.…”