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Open labor markets and Firms’ substitution between training apprentices and hiring workers

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  • Aepli, Manuel
  • Kuhn, Andreas

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 cross-border workers within our observation period, from 1995 to 2008, led to about 3500 fewer apprenticeship positions (equal to about 2% of the total number of apprentice positions).

Suggested Citation

  • Aepli, Manuel & Kuhn, Andreas, 2021. "Open labor markets and Firms’ substitution between training apprentices and hiring workers," Labour Economics, Elsevier, vol. 70(C).
  • Handle: RePEc:eee:labeco:v:70:y:2021:i:c:s0927537121000142
    DOI: 10.1016/j.labeco.2021.101979
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    Cited by:

    1. Wei Chen & Zhuzhang Yang & Hang Yan & Ying Zhao, 2023. "Promoting Construction Labor Professionalization: An Evolutionary Game Perspective," Sustainability, MDPI, vol. 15(12), pages 1-20, June.
    2. 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.
    3. Nicolò Gatti & Fabrizio Mazzonna & Raphaël Parchet & Giovanni Pica, "undated". "Opening the labor market to qualified immigrants in absence of linguistic barriers," Development Working Papers 483, Centro Studi Luca d'Agliano, University of Milano.
    4. Caroline Neuber-Pohl & Damiano Pregaldini & Uschi Backes-Gellner & Sandra Dummert & Harald Pfeifer, 2023. "How negative labor supply shocks affect training in firms: Lessons from opening the Swiss-German border," Economics of Education Working Paper Series 0203, University of Zurich, Department of Business Administration (IBW), revised Nov 2023.
    5. Pardesi, Mantej, 2024. "Productivity Convergence and Firm’s Training Strategy," Research Memorandum 003, Maastricht University, Graduate School of Business and Economics (GSBE).
    6. Tamara Gutfleisch & Robin Samuel, 2022. "Hiring in border regions: experimental and qualitative evidence from a recruiter survey in Luxembourg," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 56(1), pages 1-13, December.
    7. Maria Esther Oswald-Egg & Michael Siegenthaler, 2021. "Train drain? Access to skilled foreign workers and firms' provision of training," KOF Working papers 21-495, KOF Swiss Economic Institute, ETH Zurich.
    8. Maria Esther Oswald-Egg & Michael Siegenthaler, 2021. "Train drain? Access to skilled foreign workers and firms' provision of training," Economics of Education Working Paper Series 0186, University of Zurich, Department of Business Administration (IBW).

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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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