Training Costs and their influence on individual careers and firm success
Harald Pfeifer
The dual system of apprenticeship training is frequently described as an important factor securing a smooth transition from education to work for young adults. At the same time, it contributes to the competitiveness of German firms in a globalised economy. But which factors really influence the successful transition of former apprentices into the labor market and what kind of benefits result from training for firms?
Arguing from an economic point of view, the successful transition of former apprentices into the labor market should be strongly linked to the net costs borne by training firms. For example, a firm can only recoup net costs of training when retaining the apprentice upon completion of training. This means that those apprentices trained in firms bearing net costs have a higher probability of staying with the training firm than those being trained in firms that break even at some point during the training phase. Without being retained, the risk for apprentices to become unemployed increases, which in turn has consequences for their future wages and job stability. On the firms' side, apprenticeship training can be economically beneficial in terms of reducing the risk of a mismatch between job requirements and the skills of the employee. Further, hiring skilled personnel from the external labor market usually involves costs for recruitment, which can be saved when training and retaining apprentices. But also in the long run, investing in apprenticeship training might be beneficial due to a longer tenure (and therefore lower turnover) of former apprentices. Since the realization of post-training benefits is influenced by e.g. unions, work councils and employment protection schemes these institutions will receive special attention during the course of the project.
The main goal of the project is to analyze the influence of firms' training costs on the transition of former apprentices into the labor market. At the same time the benefits of training apprentices for the firms is an important topic to be analyzed. To achieve this goal, we plan to merge the latest wave of the BIBB-Cost-Benefit-Survey (BIBB-CBS) of the year 2007 with administrative data from the Federal Employment Agency. We thereby combine unique data on the costs of apprenticeship training with individual- and firm-level information for the years following the training measures. On the basis of this data set it is possible to relate the costs observed for firms to the further developments and careers of both actors involved. The project offers interesting results for political decision makers as well as for the scientific community.
