How to best prepare non-college bound youth for the labor market? Different approaches compete in this field, including firm-based apprenticeships, full-time vocational schooling, and on-the-job learning. Little is known about how effective these methods are, and comparisons of means are uninformative due to the selection of individuals into different streams. In this paper, we exploit the idea that variation in labor demand for apprentices affects the opportunities individuals have when they grow up. We document how variation in vacancies for apprenticeships affects educational choice. We show that at the margin, individuals substitute between apprenticeship training and full-time schoolbased vocational training. We exploit this variation to study how this formation period affects later labor market outcomes. Our results show that firm-based apprenticeship training leads to substantially lower unemployment rates at ages 23 to 26, but we do not find significant differences in wages. This suggests that these alternatives confer similar levels of productivity, but that apprenticeship training improves labor market attachment and smooths the integration into the labor market relative to vocational schooling. We investigate the responsiveness to negative shocks in an experiment based on firm closures. Our results are found to be robust in a number of specification checks, and we investigate the validity of our functional form in a semiparametric analysis.

This paper assesses the potential of `workplace training ' with reference to German Apprenticeship. When occupational matching is important, we derive conditions under which firms provide `optimal ' training packages. Since the German system broadly meets these conditions, we evaluate the effectiveness of apprenticeship using a large administrative dataset. We find returns to apprenticeship for even the lowest ability school-leavers comparable to standard estimates of the return to school, and show that training is transferable across a wide range of occupations, such as a one-digit occupation group. We conclude that the positive experience with German Apprenticeship Training may guide the design of similar policies in other countries.

This paper assesses the potential of ‘workplace training ’ with reference to German Apprenticeship. When job-shopping is important, we examine the ‘optimal ’ training package and outline conditions under which firms will provide this. Since the German system broadly meets these conditions, we evaluate the effectiveness of apprenticeship using a large administrative dataset. We find returns to apprenticeship for even the lowest ability school-leavers comparable to standard estimates of the return to school, and show that training is transferable across a wide range of occupations, such as a one-digit occupation group. We conclude that the positive experience with German Apprenticeship Training may guide the design of similar policies in other countries.

Both the effectiveness of German Apprenticeship Training (GAT) and the reasons why firms voluntarily subsidise it hinge on how transferable it is. Describing the regulations surrounding GAT and examining the effects of post-apprenticeship mobility on wages and skill use using German panel data, we show that GAT is transferable within a broad vocational field (e.g. a 1-digit occupational group). This suggests that work-based routes to skills can be effective and provides a rationale for the finding that German firms are more likely to offer apprenticeship training when there are fewer local firms operating in the same industry.

The current issue and full text archive of this journal is available at www.emeraldinsight.com/0143-7720.htm Training intensity and first labor market outcomes of apprenticeship graduates