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The effect of labor market regulations on training behavior and quality: the German labor market reform as a natural experiment

Author

Listed:
  • Anika Jansen

    (German Federal Institute for Vocational Education and Training (BiBB), Bonn)

  • Mirjam Strupler Leiser

    (University of Bern, Centre for Research in Economics of Education)

  • Felix Wenzelmann

    (German Federal Institute for Vocational Education and Training (BiBB), Bonn)

  • Stefan C. Wolter

    (University of Bern, CESifo & IZA)

Abstract
Labor market frictions are seen in many extensions of the classical human capital theory as a prerequisite for firms financing general training. The labor market reforms in Germany at the beginning of the millennium have therefore been seen by many as a danger to the firms’ willingness to support the apprenticeship training system. This paper analyzes the training strategies German firms deployed to cope with the greater labor market flexibility as a result of the labor market reform. Switzerland where no reforms had taken place serves as the counterfactual. The results show that firms successfully reduced the net-costs of training by involving apprentices in more work and reducing non-productive tasks, like practicing. Contrary to the widespread fear, this adapted training strategy resulted also in a substantial increase in work-related competencies and productivity of apprentices.

Suggested Citation

  • Anika Jansen & Mirjam Strupler Leiser & Felix Wenzelmann & Stefan C. Wolter, 2012. "The effect of labor market regulations on training behavior and quality: the German labor market reform as a natural experiment," Economics of Education Working Paper Series 0083, University of Zurich, Department of Business Administration (IBW).
    • Handle: RePEc:iso:educat:0083
    as

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    File URL: http://repec.business.uzh.ch/RePEc/iso/leadinghouse/0083_lhwpaper.pdf
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    References listed on IDEAS

    as
    1. Daron Acemoglu & Jörn-Steffen Pischke, 1998. "Why Do Firms Train? Theory and Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(1), pages 79-119.
    2. James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(4), pages 605-654.
    3. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," NBER Chapters, in: Investment in Human Beings, pages 9-49, National Bureau of Economic Research, Inc.
    4. Wolter, Stefan C. & Ryan, Paul, 2011. "Apprenticeship," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 3, chapter 11, pages 521-576, Elsevier.
    5. Muehlemann, Samuel & Pfeifer, Harald & Walden, Günter & Wenzelmann, Felix & Wolter, Stefan C., 2010. "The financing of apprenticeship training in the light of labor market regulations," Labour Economics, Elsevier, vol. 17(5), pages 799-809, October.
    6. Daron Acemoglu & Jorn-Steffen Pischke, 1999. "The Structure of Wages and Investment in General Training," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 539-572, June.
    7. Acemoglu, Daron & Pischke, Jorn-Steffen, 1999. "Beyond Becker: Training in Imperfect Labour Markets," Economic Journal, Royal Economic Society, vol. 109(453), pages 112-142, February.
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    9. Marius R. Busemeyer & Renate Neubäumer & Harald Pfeifer & Felix Wenzelmann, 2012. "The transformation of the G erman vocational training regime: evidence from firms’ training behaviour," Industrial Relations Journal, Wiley Blackwell, vol. 43(6), pages 572-591, November.
    10. Muehlemann, Samuel & Wolter, Stefan C., 2011. "Firm-sponsored training and poaching externalities in regional labor markets," Regional Science and Urban Economics, Elsevier, vol. 41(6), pages 560-570.
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    12. Samuel Muehlemann & Paul Ryan & Stefan C. Wolter, 2013. "Monopsony Power, Pay Structure, and Training," ILR Review, Cornell University, ILR School, vol. 66(5), pages 1097-1114, October.
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    Cited by:

    1. Miriam Rinawi & Uschi Backes-Gellner, 2020. "Firms’ method of pay and the retention of apprentices," Oxford Economic Papers, Oxford University Press, vol. 72(1), pages 269-291.
    2. Samuel Muehlemann & Stefan Wolter, 2014. "Return on investment of apprenticeship systems for enterprises: Evidence from cost-benefit analyses," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-22, December.

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    More about this item

    Keywords

    Apprenticeship training; difference-in-differences matching estimator; cost-benefit; labor market reforms;
    All these keywords.

    JEL classification:

    • C0 - Mathematical and Quantitative Methods - - General
    • I20 - Health, Education, and Welfare - - Education - - - General
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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