Firms’ method of pay and the retention of apprentices

The new training literature views regulated labour markets as critical for firms’ willingness to participate in apprenticeship training. These regulations allow training firms to retain their apprenticeship graduates at the end of the training period and recoup training costs. Yet, in spite of an only loosely regulated labour market, many Swiss firms offer and pay for training. Using representative data from a large employer–employee survey, we investigate whether these firms use performance pay to retain their graduates. We find that both the magnitude and the likelihood of performance pay are significantly related to a firm’s retention success.