Apprenticeship training: for investment or substitution?

Purpose - The purpose of this paper is to derive an empirical method to identify different types of training strategies of companies based on publicly available company data. Design/methodology/approach - Using a ten‐year panel, the within‐firm retention rate, defined as the average proportion of apprentices staying in a company in relation to all apprenticeship graduates of a company over several years, was analyzed. The within‐firm retention rate is used to identify these companies' training strategies. Findings - It was shown that companies' motivation for apprenticeship training in Germany is not homogeneous: 19 percent of all companies follow a substitution strategy and 44 percent follow an investment strategy. The determinants of the substitution strategy were estimated and, for example, sizeable differences were found between sectors with different skill requirements and between firms' coverage of industrial relations. Research limitations/implications - The method is well suited to classify substitution‐motivated training firms but it is less precise in identifying the investment motivation. Moreover, very small firms which train only one apprentice need longer panel duration for precise results and therefore the classification results are less precise for very small firms. Practical implications - The classification can be used to identify determinants of company participation in apprenticeship training and to predict changes in demand for apprentices. Originality/value - A simple and innovative method of identifying different types of training motivation with publicly available company data was derived, which has so far been possible only with very detailed company‐specific apprenticeship surveys.