Supply Shocks in the Market for Apprenticeship Training

S. Muehlemann*, H. Dietrich, G. Pfann, H. Pfeifer

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

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%, 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 did not decrease. 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
Article number102197
Number of pages18
JournalEconomics of Education Review
Volume86
DOIs
Publication statusPublished - 1 Feb 2022

Keywords

  • Apprenticeship market
  • Labor supply shock
  • School reform
  • Wage rigidity
  • LABOR
  • IMMIGRATION
  • GERMANY
  • DEMAND
  • PAY

Cite this