Supply Shocks in the Market for Apprenticeship Training

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." (Author's abstract, IAB-Doku) ((en))

Cite article

Muehlemann, S., Pfann, G., Pfeifer, H. & Dietrich, H. (2020): Supply Shocks in the Market for Apprenticeship Training. (GSBE Research Memoranda 36/2020), Maastricht, 40 p. DOI:10.26481/umagsb.2020036