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Open Labor Markets and Firms’ Substitution between Training Apprentices and Hiring Workers

Author

Listed:
  • Aepli, Manuel

    (Swiss Federal Institute for Vocational Education and Training)

  • Kuhn, Andreas

    (Swiss Federal Institute for Vocational Education and Training)

Abstract
In this paper, we study whether Swiss employers substitute between training apprentices and hiring cross-border workers. Because both training apprentices and hiring skilled workers are costly for firms, we hypothesize that (easier) access to cross-border workers will lead some employers to substitute away from training their own workers. We account for potential endogeneity issues by instrumenting a firm’s share of cross-border workers using a firm’s distance to the national border and therefore its possibility to fall back on cross-border workers to satisfy its labor demand. We find that both OLS and 2SLS estimates are negative across a wide range of alternative specifications, suggesting that firms substitute between training and hiring workers when the supply of skilled workers is higher. Our preferred 2SLS estimate implies that the increase in firms’ share of crossborder workers within our observation period, from 1995 to 2008, led to about 3,500 fewer apprenticeship positions (equal to about 2% of the total number of apprentice positions).

Suggested Citation

  • Aepli, Manuel & Kuhn, Andreas, 2019. "Open Labor Markets and Firms’ Substitution between Training Apprentices and Hiring Workers," IZA Discussion Papers 12479, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12479
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Papps, Kerry L., 2020. "How the Minimum Wage Affects Training among Apprentices," IZA Discussion Papers 13499, Institute of Labor Economics (IZA).
    2. Jason Poulos & Andrea Albanese & Andrea Mercatanti & Fan Li, 2021. "Retrospective causal inference via matrix completion, with an evaluation of the effect of European integration on cross-border employment," Papers 2106.00788, arXiv.org.

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    More about this item

    Keywords

    immigration; cross-border workers; firm behaviour; labor demand; substitution effects; apprenticeship training;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

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