Proponents of the German apprenticeship system point out that the early attachment of trainees to the world of work provides two benefits. First, their experience and skills certification increase information, reducing search unemployment at early stages in their careers. Second, the accumulation of firm-specific human capital leads to stable long-term employment relationships. In Discussion Paper No. 1034, Research Affiliate Rainer Winkelmann uses data on individual schooling and employment histories drawn from the German Socio-Economic Panel to assess the effects of apprenticeship training on labour market performance.

Winkelmann questions whether completed apprenticeship training greatly facilitates labour market entry. Before entering full-time employment, 26% of apprentices undertake further vocational training, perform mandatory military service, become unemployed or drop out of the labour force, while 36% of initial full-time employment spells are terminated within short periods. Winkelmann finds evidence of high post-apprenticeship unemployment at the beginning of careers: 19% experience an unemployment spell before employment. In comparison to university or other training, the transition of apprentices to employment is faster and more direct, but an apprentice's first job tends to last a shorter time than that of a university graduate.

Winkelmann also asks whether there is there any evidence for accumulation of firm-specific human capital and screening behaviour that might explain firms' willingness to participate in apprenticeship programmes. He finds that the long-term retention rate of trainees is low and that the main determinant of post-apprenticeship tenure is the size of the training company. Surprisingly, it does not matter whether apprentices switch employers or not. Overall the study reveals that apprenticeship is a less secure way to stable employment than is often assumed, casting doubt on standard human capital explanations of this training.

Apprenticeship and After: Does it Really Matter?
Rainer Winkelmann

Discussion Paper No. 1034, October 1994 (HR)