Abstract
We present a model with heterogeneous inputs and constant elasticity of substitution to examine the possible effects of a supply shock in the market for apprenticeship
training. The model’s predictions are tested using data from a German high school reform that led to a one-time increase in the supply of highly educated apprentices. A difference-in-differences estimation strategy exploits regional variation in the timing of implementation, and an instrumental variable approach identifies the supply shock effects. We find that apprenticeship contracts among individuals with a high school degree increased by 7.8%, while apprentice wages were unaffected by the supply
shock. Moreover, we find no evidence of substitution effects, as the number of training contracts among individuals with a lower-level school degree remained unchanged. Our model predicts that such effects may occur when wages are sticky for apprentices with
a high level of education relative to their productivity, which signals inefficiencies in the market for apprenticeship training.
training. The model’s predictions are tested using data from a German high school reform that led to a one-time increase in the supply of highly educated apprentices. A difference-in-differences estimation strategy exploits regional variation in the timing of implementation, and an instrumental variable approach identifies the supply shock effects. We find that apprenticeship contracts among individuals with a high school degree increased by 7.8%, while apprentice wages were unaffected by the supply
shock. Moreover, we find no evidence of substitution effects, as the number of training contracts among individuals with a lower-level school degree remained unchanged. Our model predicts that such effects may occur when wages are sticky for apprentices with
a high level of education relative to their productivity, which signals inefficiencies in the market for apprenticeship training.
Original language | English |
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Place of Publication | Maastricht |
Publisher | Maastricht University, Graduate School of Business and Economics |
Number of pages | 42 |
DOIs | |
Publication status | Published - 21 Dec 2020 |
Publication series
Series | GSBE Research Memoranda |
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Number | 036 |
ISSN | 2666-8807 |
JEL classifications
- i21 - Analysis of Education
- j20 - Demand and Supply of Labor: General
Keywords
- apprenticeship market
- labor supply shock
- school reform