Supply shocks in the market for apprenticeship training

Samuel Muehlemann, Gerard Pfann, Harald Pfeifer, Hans Dietrich

Research output: Working paperProfessional

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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.
Original languageEnglish
Place of PublicationMaastricht
PublisherROA
Number of pages42
DOIs
Publication statusPublished - 17 Dec 2020

Publication series

SeriesROA Research Memoranda
Number013

JEL classifications

  • i21 - Analysis of Education
  • j20 - Demand and Supply of Labor: General

Keywords

  • apprenticeship market
  • labor supply shock
  • school reform

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