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Train drain? Access to foreign workers and firms’ provision of training

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  • Oswald-Egg, Maria Esther
  • Siegenthaler, Michael
Abstract
Does better access to foreign workers reduce firms’ willingness to provide general skills training? We analyze how the opening of the Swiss labor market to workers from the European Union affected the number of apprenticeships that firms provide. We exploit that the availability of foreign workers increased more in firms close to the border because they gained unrestricted access to cross-border workers from Switzerland’s neighboring countries. Our Difference-in-Differences estimates suggest that firm-provided training to unskilled workers and access to foreign workers are not necessarily substitutes: opening the borders did not have a statistically significant effect on apprenticeship provision. Using unique data on firms’ costs and motives to train apprentices, we show that the greater availability of foreign workers reduced firms’ incentive to train because hiring skilled workers externally became cheaper, among others because new hires became more productive from the start. Positive impacts on firm growth worked in the opposite direction.

Suggested Citation

  • Oswald-Egg, Maria Esther & Siegenthaler, Michael, 2023. "Train drain? Access to foreign workers and firms’ provision of training," Labour Economics, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:labeco:v:85:y:2023:i:c:s0927537123001112
    DOI: 10.1016/j.labeco.2023.102436
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    1. Manuel Aepli & Samuel Muehlemann & Harald Pfeifer & Jürg Schweri & Felix Wenzelmann & Stefan C. Wolter, 2024. "The Impact of Hiring Costs for Skilled Workers on Apprenticeship Training: A Comparative Study," CESifo Working Paper Series 11066, CESifo.

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    More about this item

    Keywords

    Immigration; Firm-provided training; Vocational education and training; Labor mobility; Hiring costs; Immigration policy;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

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