IDEAS home Printed from https://ideas.repec.org/p/iso/educat/0095.html
   My bibliography  Save this paper

The Costs of Recruiting Apprentices: Evidence from German Firm-Level Data

Author

Listed:
  • Samuel Muehlemann

    (Ludwig-Maximilians-Universitaet Muenchen & IZA Bonn)

  • Harald Pfeifer

    (Federal Institute for Vocational Education and Training (BIBB) Bonn & Research Centre for Education and the Labour Market (ROA) Maastricht)

  • Felix Wenzelmann

    (Federal Institute for Vocational Education and Training (BIBB) Bonn)

Abstract

In this paper, we use firm-level data to analyse a firm's costs of recruiting apprentices in Germany. We find that recruitment costs amount on average to 600 Euros per hire (approximately one month of apprentice pay or 1-2 per cent of a firm’s training expenditures), but costs are heterogeneous across firms and vary strongly with the training occupation. Our results suggest that shortages in the local supply of apprentices and a high degree of competition among training firms in the region increase recruitment costs. Furthermore, we find that firms with a works council or an investment-oriented training strategy incur higher recruitment costs. Finally, marginal recruitment costs first increase but eventually decrease for firms hiring a large number of apprentices. Our results are important in light of the increasing firm competition for talented school leavers induced by demographic change.

Suggested Citation

  • Samuel Muehlemann & Harald Pfeifer & Felix Wenzelmann, 2013. "The Costs of Recruiting Apprentices: Evidence from German Firm-Level Data," Economics of Education Working Paper Series 0095, University of Zurich, Department of Business Administration (IBW), revised Nov 2015.
    • Handle: RePEc:iso:educat:0095
    as

    Download full text from publisher

    File URL: http://repec.business.uzh.ch/RePEc/iso/leadinghouse/0095_lhwpaper.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Manning, Alan, 2011. "Imperfect Competition in the Labor Market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 11, pages 973-1041, Elsevier.
    2. Uschi Backes-Gellner & Simone N. Tuor, 2010. "Avoiding Labor Shortages by Employer Signaling: On the Importance of Good Work Climate and Labor Relations," ILR Review, Cornell University, ILR School, vol. 63(2), pages 271-286, January.
    3. Daniel S. Hamermesh & Gerard A. Pfann, 1996. "Adjustment Costs in Factor Demand," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1264-1292, September.
    4. Marc Blatter & Samuel Muehlemann & Samuel Schenker & Stefan C. Wolter, 2016. "Hiring costs for skilled workers and the supply of firm-provided training," Oxford Economic Papers, Oxford University Press, vol. 68(1), pages 238-257.
    5. Blatter, Marc & Muehlemann, Samuel & Schenker, Samuel, 2012. "The costs of hiring skilled workers," European Economic Review, Elsevier, vol. 56(1), pages 20-35.
    6. Mühlemann, Samuel & Wolter, Stefan C. & Wüest, Adrian, 2009. "Apprenticeship Training and the Business Cycle," IZA Discussion Papers 4460, Institute of Labor Economics (IZA).
    7. Alan Manning, 2006. "A Generalised Model of Monopsony," Economic Journal, Royal Economic Society, vol. 116(508), pages 84-100, January.
    8. Ben Kriechel & Samuel Muehlemann & Harald Pfeifer & Miriam Schuette, 2011. "Works councils, collective bargaining and apprenticeship training," Economics of Education Working Paper Series 0057, University of Zurich, Department of Business Administration (IBW).
    9. Lindley, Robert M, 1975. "The Demand for Apprentice Recruits by the Engineering Industry, 1951-71," Scottish Journal of Political Economy, Scottish Economic Society, vol. 22(1), pages 1-24, February.
    10. Colm Harmon & Hessel Oosterbeek & Ian Walker, 2003. "The Returns to Education: Microeconomics," Journal of Economic Surveys, Wiley Blackwell, vol. 17(2), pages 115-156, April.
    11. Samuel Muehlemann & Romy Braendli & Stefan C. Wolter, 2013. "Invest in the best or compensate the weak? An empirical analysis of the heterogeneity of a firm's provision of human capital," Economics of Education Working Paper Series 0086, University of Zurich, Department of Business Administration (IBW).
    12. Dube, Arindrajit & Freeman, Eric & Reich, Michael, 2010. "Employee Replacement Costs," Institute for Research on Labor and Employment, Working Paper Series qt7kc29981, Institute of Industrial Relations, UC Berkeley.
    13. Stevens, Margaret, 1994. "An Investment Model for the Supply of Training by Employers," Economic Journal, Royal Economic Society, vol. 104(424), pages 556-570, May.
    14. Heineck, Guido & Kleinert, Corinna & Vosseler, Alexander, 2011. "Regionale Typisierung: Was Ausbildungsmärkte vergleichbar macht," IAB-Kurzbericht 201113, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    15. Kramarz, Francis & Michaud, Marie-Laure, 2010. "The shape of hiring and separation costs in France," Labour Economics, Elsevier, vol. 17(1), pages 27-37, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Uschi Backes-Gellner, 2014. "Benefits of Apprenticeship Training and Recent Challenges - Empirical Results and Lessons from Switzerland and Germany," Economics of Education Working Paper Series 0097, University of Zurich, Department of Business Administration (IBW).
    2. Muehlemann, Samuel & Dietrich, Hans & Pfann, Gerard & Pfeifer, Harald, 2022. "Supply Shocks in the Market for Apprenticeship Training," Economics of Education Review, Elsevier, vol. 86(C).
    3. Mühlemann, Samuel & Pfann, Gerard A. & Pfeifer, Harald & Dietrich, Hans, 2018. "The Effects of Supply Shocks in the Market for Apprenticeships: Evidence from a German High School Reform," IZA Discussion Papers 11264, Institute of Labor Economics (IZA).
    4. Stockinger, Bastian & Zwick, Thomas, 2016. "Apprentice Poaching in Regional Labor Markets," VfS Annual Conference 2016 (Augsburg): Demographic Change 145565, Verein für Socialpolitik / German Economic Association.
    5. Pfann, Gerard & Muehlemann, Samuel & Pfeifer, Harald & Dietrich, Hans, 2018. "Supply Shocks in the Market for Apprenticeships: Evidence from a German High School Reform," CEPR Discussion Papers 12669, C.E.P.R. Discussion Papers.
    6. Harald Pfeifer & Uschi Backes-Gellner, 2017. "Another piece of the puzzle: Firms' investment in training as optimization of skills inventory," Economics of Education Working Paper Series 0136, University of Zurich, Department of Business Administration (IBW), revised Jun 2018.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marc Blatter & Samuel Muehlemann & Samuel Schenker & Stefan C. Wolter, 2016. "Hiring costs for skilled workers and the supply of firm-provided training," Oxford Economic Papers, Oxford University Press, vol. 68(1), pages 238-257.
    2. Samuel Muehlemann & Stefan Wolter, 2014. "Return on investment of apprenticeship systems for enterprises: Evidence from cost-benefit analyses," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-22, December.
    3. Samuel Muehlemann & Harald Pfeifer, 2016. "The Structure of Hiring Costs in Germany: Evidence from Firm-Level Data," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(2), pages 193-218, April.
    4. Samuel Muehlemann & Mirjam Strupler Leiser, 2015. "Ten Facts You Need To Know About Hiring," Economics of Education Working Paper Series 0111, University of Zurich, Department of Business Administration (IBW), revised Sep 2015.
    5. Frederico Belo & Jun Li & Xiaoji Lin & Xiaofei Zhao, 2017. "Labor-Force Heterogeneity and Asset Prices: The Importance of Skilled Labor," The Review of Financial Studies, Society for Financial Studies, vol. 30(10), pages 3669-3709.
    6. Aepli, Manuel & Mühlemann, Samuel & Pfeifer, Harald & Schweri, Jürg & Wenzelmann, Felix & Wolter, Stefan C., 2024. "The Impact of Hiring Costs for Skilled Workers on Apprenticeship Training: A Comparative Study," IZA Discussion Papers 16919, Institute of Labor Economics (IZA).
    7. Hinz, Tina, 2016. "Personnel policy adjustments when apprentice positions are unfilled: Evidence from German establishment data," Discussion Papers 99, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    8. Mirjam Strupler Leiser & Stefan C. Wolter, 2017. "Empirical Evidence on the Effectiveness of Social Public Procurement Policy: The Case of the Swiss Apprenticeship Training System," LABOUR, CEIS, vol. 31(2), pages 204-222, June.
    9. Cestone, Giacinta & Fumagalli, Chiara & Kramarz, Francis & Pica, Giovanni, 2023. "Exploiting Growth Opportunities: The Role of Internal Labor Markets," CEPR Discussion Papers 17890, C.E.P.R. Discussion Papers.
    10. Manning, Alan, 2011. "Imperfect Competition in the Labor Market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 11, pages 973-1041, Elsevier.
    11. Pfann, Gerard & Muehlemann, Samuel & Pfeifer, Harald & Dietrich, Hans, 2018. "Supply Shocks in the Market for Apprenticeships: Evidence from a German High School Reform," CEPR Discussion Papers 12669, C.E.P.R. Discussion Papers.
    12. Harald Pfeifer & Uschi Backes-Gellner, 2017. "Another piece of the puzzle: Firms' investment in training as optimization of skills inventory," Economics of Education Working Paper Series 0136, University of Zurich, Department of Business Administration (IBW), revised Jun 2018.
    13. 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).
    14. Blatter, Marc & Muehlemann, Samuel & Schenker, Samuel, 2012. "The costs of hiring skilled workers," European Economic Review, Elsevier, vol. 56(1), pages 20-35.
    15. Muehlemann, Samuel & Dietrich, Hans & Pfann, Gerard & Pfeifer, Harald, 2022. "Supply Shocks in the Market for Apprenticeship Training," Economics of Education Review, Elsevier, vol. 86(C).
    16. Kuhn, Andreas & Schweri, Jürg & Wolter, Stefan C., 2022. "Local norms describing the role of the state and the private provision of training," European Journal of Political Economy, Elsevier, vol. 75(C).
    17. Dube, Arindrajit & Freeman, Eric & Reich, Michael, 2010. "Employee Replacement Costs," Institute for Research on Labor and Employment, Working Paper Series qt7kc29981, Institute of Industrial Relations, UC Berkeley.
    18. Dicarlo, Emanuele, 2022. "How Do Firms Adjust to Negative Labor Supply Shocks? Evidence from Migration Outflows," IZA Discussion Papers 14994, Institute of Labor Economics (IZA).
    19. Jansen, A., 2016. "Is investing in apprentices related to decision-makers’ altruism and their high time preference?," Research Memorandum 010, Maastricht University, Graduate School of Business and Economics (GSBE).
    20. Mühlemann, Samuel & Pfann, Gerard A. & Pfeifer, Harald & Dietrich, Hans, 2018. "The Effects of Supply Shocks in the Market for Apprenticeships: Evidence from a German High School Reform," IZA Discussion Papers 11264, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    Recruitment costs; apprenticeship training; human capital investment; local labour markets; local training markets; demographic change;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iso:educat:0095. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sara Brunner (email available below). General contact details of provider: https://edirc.repec.org/data/isuzhch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.