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A principal specifies time paths of effort provision, task allocation, and knowledge transfer for a cash-constrained apprentice, who is free to walk away at any time. In the optimal contract the apprentice pays for training by working for low or no wages and by working inefficiently hard. The apprentice can work on both knowledge-complementary and knowledge-independent tasks. We study the optimal time path of effort distortions and their impact on the knowledge transfer, and analyze the effect of regulatory limits on the length of apprenticeships and on how much effort apprentices are allowed to provide.

PurposeThe aim of this study is to examine the characteristics of firms that influence their hiring decisions regarding the share of newly hired apprentices with Abitur and maximum lower secondary certificates.Design/methodology/approachThe study uses 2,004 training firms of the BIBB Qualification Panel data from 2013 to 2018 to estimate fixed-effects regressions analysing the effect of firms’ qualification structures and recruitment problems on the share of newly hired apprentices with Abitur (highest German secondary school-leaving certificate) and maximum lower secondary certificates (in German maximal Hauptschulabschluss).FindingsThe results indicate that firms with a higher qualification structure hire a higher share of apprentices with Abitur. However, the effect gets insignificant once controlling for the share of applicants with Abitur. Further, the study suggests that firms reduce their requirements on the school-leaving certificate of VET applicants when they suffer from unfilled training positions. Moreover, the share of applicants with Abitur and maximum lower secondary certificate has high explanatory power for the share of newly hired apprentices with these certificates.Originality/valueThe study highlights the role of firms in facilitating the transition of young people entering dual VET in Germany, whereas most studies so far have focused on the individual level. Further, the study contributes to the understanding of firms’ hiring processes of apprentices beyond the question of whether a firm provides VET at all and could be used for designing labour market policy programs for youth.

This study investigates the retention rate of young people in firms that offer apprenticeship positions. While the majority of training firms hire apprentices with the aim of retaining them when the contract ends, only a small proportion of youths actually transition into full-time employment in the same firm. To explain this phenomenon, I rely on a tractable model that incorporates firm decision-making processes, enabling an analysis of the retention rate. By estimating the productivity distribution of apprentices based on observed wage data from French surveys, the findings indicate that training firms, on average, benefit more from separating from apprentices rather than hiring them as workers.

The high rates of premature contract termination (PCT) in vocational education and training (VET) programs have led to an increasing number of studies examining the reasons why adolescents drop out. Since adolescents’ trajectories after a PCT are quite diverse, a thorough assessment of different dropout directions is called for. However, empirical studies that distinguish between dropout directions are still scarce. The same is true for studies that differentiate between PCTs initiated by the trainees themselves and those initiated by the training company. Based on data from the German National Educational Panel Study (NEPS) on trainees in German dual VET programs (n = 5823), this study identifies six different dropout directions: (1) downward PCT into unqualified employment or unemployment, (2) downward PCT into a prevocational program, (3) horizontal PCT that represents a change of training company or (4) a change of occupation, and (5) upward PCT into general education or (6) higher education. Using multinomial logistic regression models we examine the effect of (a) the initiating party and (b) self-reported PCT reasons of trainees on dropout directions. Regarding trainees’ reasons we include reasons related to different aspects of the training (personal reasons, not the desired training occupation, financial reasons, training quality, conflicts, excessive demand, and being offered a different training position). The results indicate that in cases where trainees are dismissed by the training company, a horizontal change to a different training company becomes more likely, while the probability of an upward dropout into higher education decreases. Regarding PCT decisions made by trainees themselves, a downward PCT into unqualified employment or unemployment is more likely if personal reasons were the cause of a PCT decision. Moreover, the probability of a change of training company (horizontal PCT) increases in cases of conflict and if there is a prospect of a different training position, and decreases if the training position is not the desired occupation. A change of occupation (horizontal PCT) is more likely when there is the opportunity for a different training position available. Furthermore, upward PCTs (both into further general education and higher education) are more likely in cases where the training was in a field that was not the desired occupation. The probability of upward PCT into higher education decreases when there are conflicts and excessive demands, while upward PCTs into general education are significantly less likely when a different training position is obtained. The differential effects that occur for different types of PCTs emphasize that adolescents dropping out of VET cannot be treated as a homogenous group. Consequently, the results underscore the importance of conducting a more thorough assessment of both dropout directions and the initiating party of a PCT in future research.

The potential role of vocational education and training (VET) for innovation is the subject of a growing number of studies. Quantitative evidence for this relationship, however, remains scarce. Therefore, this paper uses representative German company data to examine the relationship between a firm’s initial VET activity and its innovation output. The results based on linear probability models and entropy balancing indicate that the direct link between initial VET and firm-level innovation is more ambiguous than often postulated. For the total population of German companies, a positive correlation with initial VET is only found for incremental product and process innovations. Furthermore, a significant link between initial VET and innovation is only found in the group of microenterprises with less than 10 employees. From this, we conclude that participation in the VET system primarily promotes the innovative capacity of very small training companies through the diffusion of new technologies and knowledge. The paper concludes with implications for policy and research.

Extensive research has focused on various dimensions of dropout reasons, yet it often overlooks the importance of considering different dropout directions in the analysis. Our cross-sectional study examines the association of factors of six dimensions of dropout reasons (learner, professional, company, school, activity, and context) with four directions of dropout intention (upwards, downwards, horizontal: occupational change, and horizontal: company change). Stepwise regression analyses using dropout intention as a prior inner condition (before actual dropout behavior) with data from 559 industrial and office management trainees in Germany are conducted. Results indicate that the largest association across different directions of dropout intentions is exerted by the trainees’ occupational identity (professional dimension) and the year in training (context dimension). School factors like the use of outdated teaching equipment and learner factors like trainees’ high professional commitment predict upward dropouts, while a low level of trainees’ workplace social involvement (activity dimension) predicts downward dropouts. Company factors like unfavourable working regulations predict occupational change, and a low level of trainees’ functional involvement (activity dimension) predicts company change. Additionally, we confirm the previously found significant associations of activity and professional factors, particularly the cooperation between learning venues (school and training company) and the alignment between training and the desired occupation. The desired occupation predicts dropout intentions in the upward and horizontal direction (occupational change), and a low level of learning venue cooperation predicts the upward, horizontal (company change), and downward directions. To mitigate dropout rates, we recommend that vocational education and training stakeholders adopt preventive strategies by targeting specific directions of dropout intentions and the factors associated with the six dimensions of dropout reasons.

On the macro level (federal level) and exo level (state or regional level), the German Dual Apprenticeship System shows a high degree of institutionalised collaboration. However, the companies and vocational schools on the meso level (institutional level and level of the actors), in contrast, are just loosely coupled with a dominant partner (i.e., companies) and subordinate partner (i.e., vocational schools). How and why these structures have emerged, established and stabilised is part of a complex historical, societal and economical process. The historical developmental will be elaborated in the article. The term 'dual system' was invented in Germany in the 1960s, and the intention was to emphasise equal responsibilities, partnership of equals, lively encounters and close collaboration between companies and schools. This vision is not yet a reality, as the presented empirical survey demonstrates. A majority of companies do not or rather seldom collaborate with 'their' vocational schools. 74.2% of the companies do not or seldom coordinate their work, and 93% of the companies do not or seldom cooperate with the vocational schools. The German Dual Apprenticeship System operates on the actual meso level just on the basis of less than 30% of its potentiality. The term 'parallel systems' seems to be more appropriate to characterise the actual situation on the meso level than the term 'dual system'.

Even though the recession in Switzerland triggered by COVID-19 ultimately remained without consequences for the apprenticeship market, significantly fewer apprenticeship contracts had been signed in the months of the first shutdown in 2020 than in the same months of the previous year. Using daily search queries on the national administrative platform for apprenticeship vacancies from February 2020 until April 2021 as a proxy for the supply of potential apprentices, we find a temporal pattern that coincides perfectly with the development of signed apprenticeship contracts. Furthermore, the analyses show that the initially very strong relationship between the intensity of the politically imposed restrictions to fight the COVID-19 pandemic and the daily search queries diminished over time, leading to a search intensity in March 2021 that was back at pre-pandemic level.

Previous studies typically relate apprenticeship training or more generally ‘Vocational Education and Training’ (VET) to training that is highly specific and that uses well-established technologies. Accordingly, apprenticeship training is typically not expected to have positive effects on innovation. In contrast, we argue in this paper that the type of dual apprenticeship training seen in Switzerland (or Germany and Austria) does create positive innovation effects due to the VET system’s built-in and institutionalized curriculum development and updating processes. These processes ensure that firms participating in apprenticeship training gain access to knowledge that is close to the innovation frontier and that ultimately fosters innovation. We provide theoretical explanations of how this knowledge diffusion works and how it can help to generate innovation. We use the Swiss VET system as one example and derive hypotheses about the relationship between firms’ participation in apprenticeship training and their innovation outcomes. Empirical analyses support our hypotheses. In a VET system with a built-in curriculum-updating process like the one in Switzerland (or Germany), firms participating in apprenticeship training have higher innovation outcomes than do non-participating firms.

Purpose The purpose of this paper is to analyze how long-run unemployment of former apprentices depends on the size of their training firm and their ability. Design/methodology/approach The authors use a large administrative data set that follows graduated apprentices during their working life. They show that training in large and medium-sized firms is associated with considerably less unemployment. This, however, may simply be the result of sorting processes, i.e. larger training firms with higher wage levels attract and choose the most able young workers. Therefore, the authors use a proxy for ability to estimate and control for the impact of ability on long-run unemployment. They assume that rank-order tournaments for the most attractive training positions take place and take into account an institutional peculiarity of the German training system, the empirically observable regional immobility of apprentices. Accordingly, they use a region-specific ranking based on training plants’ size or median wages, respectively, to proxy for apprentices’ ability. Findings The negative association between training plant size and long-run unemployment is muted but still statistically well determined even after controlling for the rank of an individual’s training firm in the local plant size distribution or the local wage distribution, respectively. Thus, the rank itself is a predictor for long-run unemployment of apprentices. The fact that the position in the local size distribution matters conditional on plant size shows that there is a local competition for training places. Practical implications Lacking mobility may increases aggregate unemployment, as mobility reduces the risk of unemployment. Social implications The results imply that supporting regional mobility of young workers, e.g., by informing them better about existing mobility subsidies and dormitories for apprentices and by creating additional mobility incentives is warranted. Originality/value This is the first study to investigate long-run unemployment of former apprentices. Furthermore, the authors develop new variables to proxy for ability.