Many attribute the UK's poor economic performance to its relatively low skill level and especially to the low proportion of the 16-18 age group studying for formal qualifications. Apprenticeships traditionally provided training for only a subset of school-leavers, and their number has declined over the past three decades. While this system clearly needed reform, many view apprenticeships in general and the German system in particular as a desirable form of training. Much recent research has modelled training incidence and its impact on earnings as a proxy for productivity, but there has been little empirical work on early training's impact on employment duration.

In Discussion Paper No. 762, Research Fellow Alison Booth and Stephen Satchell examine the impact of apprenticeships on employment duration and early job mobility for young men in their first job in the late 1970s. The first job ends in three mutually exclusive ways: voluntary quits to another job or unemployment and involuntary termination of employment. They estimate competing-risks hazard models to measure the impact of first-job apprenticeships on the hazards of exit into unemployment or another job, controlling for individual attributes and firm characteristics, using the 1981 National Child Development Study Sweep 4 (NCDS4). This includes comprehensive data on the first jobs of age-16 school leavers in 1974 and any associated training. Although old, these data remain relevant to current policy debates as a valuable bench-mark on apprenticeship schemes before the Thatcher reforms.

Booth and Satchell find that apprenticeships were offered to young men of above-average ability by larger firms in a core of industries, but there were no significant differences between public and private sectors. Their estimates with and without explicit modelling of the timing of training produce broadly similar results: completed apprenticeships reduced and terminated apprenticeships increased exit rates to both destinations relative to the base of no training. These results suggest that employers were relatively more likely to retain trained workers (who had completed apprenticeships), who were also relatively more likely to want to stay.

Apprenticeships and Job Tenure: A Competing Risks Model with Time-varying Covariates
Alison L Booth and Stephen E Satchell

Discussion Paper No. 762, February 1993 (HR)