Specificity of Occupational Training and Occupational Mobility: An Empirical Study Based on Lazear's Skill-Weights Approach

Abstract

According to standard human capital theory firm financed training cannot be explained if skills are of general nature. Nevertheless, investments of firms into general training can be observed and there has been a large literature to explain this puzzle, mostly referring to imperfect labor market issues. In German speaking countries firms invest heavily into apprenticeship training although it is assumed to be general. In our paper, we study the question to what extent apprenticeship training is general at all. Our paper for the first time studies how specificity of training may be defined based on Lazear's skill-weights approach. In our empirical part we use a unique German Qualification Survey, containing extensive information about the required skills at a workplace. We build occupationspecific skill-weights and find that the more specific the skill portfolio in an occupation is in comparison to the general labor market, the higher are the net costs firms have to bear for apprenticeship training in the respective occupations. At the same time, the more specific the skill requirements are in an occupation, the smaller is the probability of an occupational change during an employee's entire career. Due to the new definition of occupational specificity, we thus find that apprenticeship training-formerly seen as general training-is very heterogeneous in its specificity.

Good Occupation - Bad Occupation? The Quality of Apprenticeship Training

“…Our distinction between the occupation groups is supported by the argument that the more specific the skill requirements of an occupation compared to the labour market in general, the smaller is the probability that workers change occupations after completion of apprenticeship training (Geel et al, 2008). Apprentices in more specific occupations are stuck because a change of occupation would reduce the value of their specific skill combination.…”

Teaching in vocational education as a second career

“…Refinements of the human capital theory (e.g., the skills weight theory, see Lazear 2009) assume the existence of no general or specific human capital but only of different combinations of skills. These refinements suggest that, regardless of the existing duration of employment, mobility between employers, occupations and industries can still be high provided that the potential employment alternative requires a similar mix of skills (see, e.g., Geel et al 2010). For our hypotheses, this additional factor is relevant because a vocational teacher's job not only calls for levels of expertise similar to those required in the former occupation but also requires above-average expertise levels (i.e., a long history of skillbuilding) in the original occupation.…”

Personnel Economics: Hiring and Incentives

“…Presumably these derive from firm-level differences in endowments of other factors of production or product-market strategy, but connections between, say, product-market differentiation and skill-weight-driven labor-market differentiation have yet to be drawn out. It may be fruitful to connect Lazear's skill-weights approach to the different dimensions of worker skill as measured by Abowd, Haltiwanger, Lane, McKinsey and Sandusky (2007) Geel et al (2009) offers detailed survey evidence on skills possessed by individuals in different occupations, which allows the authors to construct an index of occupational skill-specificity. Greater skill-specificity is associated with both a larger investment by firms in training, and lower across-occupation mobility after skills have been acquired.…”

“…A natural story for the lower relative demand for experienced workers by firms with large technology investments is that experienced workers have invested in specific skills that are made obsolete by the investments in new technologies. Drawing such connections would require detailed firm-and employee-level data on specific skills required in jobs and held by employees.Some of the main empirical predictions of Lazear's model -on market thickness and firm size effects in tenure coefficients in wage regressions -have yet to be examined by empiricists Geel, Mure and Backes-Gellner (2009). use data from the German BIBB/IAB Qualification and Career Surveys to test some implications of the model for occupational training.…”