Transferability, Mobility and Youth Training in Germany and Britain: A Simple Theoretical Analysis
By Damon Clark and René Fahr
It has long been known that German apprentices are mobile across firms and occupations. Some commentators view this phenomenon in a negative light: if training is specific to the firm and occupation, then returns are lost when trainees move. Paradoxically, others have lauded German Apprenticeship Training for providing training that is transferable across firms and occupations, particularly in comparison to youth training available in Britain. We reconcile these positions in a simple illustrative model that shows that in a deregulated training market (as could be said to exist in Britain), training may be insufficiently transferable, and too few workers may be trained. In contrast, training that is both regulated and subsidized (as in the German case) can result in optimal training outcomes. A simple corollary is that mobility of trainees is higher in the socially optimal case. Other predictions of the model are that training regulations alone will reduce the number of workers trained, whilst training subsidies alone will not affect the quality of training provided.
JEL classification: I22, I28, J24, N30
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