Occupational and classroom training

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Do firms benefit from apprenticeship investments?

Why spending on occupational skills can yield economic returns to employers

10.15185/izawol.55 55 Lerman, R

by Robert Lerman

Economists once believed firms do not pay to develop occupational skills that workers could use in other, often competing, firms. Researchers now recognize that most firms benefit from investing in apprenticeship training. Evidence indicates that financial returns to firms vary. Some recoup their investment within the apprenticeship period, while others see their investment pay off only after accounting for reduced turnover, recruitment, and initial training costs. Generally, the first year of apprenticeships involves significant costs, but subsequently, the apprentice’s contributions exceed his/her wages and supervisory costs. Most participating firms view apprenticeships as offering certainty that all workers have the same high level of expertise and ensuring a supply of well-trained workers during sudden increases in demand and to fill leadership positions.

Youth labor market interventions

Comprehensive programs that focus on skills can reduce unemployment and upgrade skills in OECD countries

10.15185/izawol.106 106 Kluve, J

by Jochen Kluve

Reducing youth unemployment and generating more and better youth employment opportunities are key policy challenges worldwide. Active labor market programs for disadvantaged youth may be an effective tool in such cases, but the results have often been disappointing in Organisation for Economic Co-operation and Development (OECD) countries. The key to a successful youth intervention program is comprehensiveness, comprising multiple targeted components, including job-search assistance, counseling, training, and placement services. Such programs can be expensive, however, which underscores the need to focus on education policy and earlier interventions in the education system.

Does vocational training help young people find a (good) job?

Systems combining structured learning on the job with classroom training can ease youth unemployment

10.15185/izawol.112 112 Eichhorst, W

by Werner Eichhorst

Youth unemployment has increased in many industrialized countries following the recent global recession. However, this reflects not only the cyclical shock, but also the crucial role of institutions in structuring the transition from school to work. Vocational training, in particular in a dual form combining vocational schooling and structured learning on-the-job, is often considered to be one of the most important policy solutions in combating youth unemployment. The evidence available supports this perception, but the institutional requirements of a successful training system also have to be taken into account from a policy perspective.

Is training effective for older workers?

Training programs that meet the learning needs of older workers can improve their employability

10.15185/izawol.121 121 Picchio, M

by Matteo Picchio

The labor market position of older workers is cause for concern in many industrialized countries. Rapid population aging is challenging pension systems. The recent economic crisis has forced many older adults out of the workforce, into either pre-retirement or non-employment. Encouraging people to work longer and fostering the employability of older workers have become priorities for policymakers. Training specifically designed for older workers might help attain these goals, since it may refresh human capital and reduce the pay–productivity gap. Training older workers might also benefit employers and society as a whole.

Who benefits from firm-sponsored training?

Firm-sponsored training benefits both workers and firms through higher wages, increased productivity and innovation

10.15185/izawol.145 145 Dostie, B

by Benoit Dostie

Workers participating in firm-sponsored training receive higher wages as a result. But given that firms pay the majority of costs for training, shouldn’t they also benefit? Empirical evidence shows that this is in fact the case. Firm-sponsored training leads to higher productivity levels and increased innovation, both of which benefit the firm. Training can also be complementary to, and enhance, other types of firm investment, particularly in physical capital, such as information and communication technology (ICT), and in organizational capital, such as the implementation of high-performance workplace practices.

How can temporary work agencies provide more training?

Staffing agencies could play a more prominent role in the provision of training for the low qualified and previously unemployed

10.15185/izawol.251 251 Spermann, A

by Alexander Spermann

Temporary work agencies use training as a recruitment and retention argument when qualified labor is scarce. However, short job assignments present a major obstacle for employers and employees to increase investment in training. As temporary agency workers are mainly low-qualified and often previously unemployed, paid work in combination with training should lead to more sustainable employment. Adjustments in labor market institutions could make the provision of training more attractive for both staffing agencies and temporary agency workers.

The dynamics of training programs for the unemployed

Job-search training and occupational skills training are both effective

10.15185/izawol.277 277 Osikominu, A

by Aderonke Osikominu

Time plays an important role in both the design and interpretation of evaluation studies of training programs. While the start and duration of a training program are closely linked to the evolution of job opportunities, the impact of training programs in the short and longer term changes over time. Neglecting these “dynamics” could lead to an unduly negative assessment of the effects of certain training schemes. Therefore, a better understanding of the dynamic relationship between different types of training and their respective labor market outcomes is essential for a better design and interpretation of evaluation studies.

How to minimize lock-in effects of programs for unemployed workers

Appopriate timing and targeting of activation programs for the unemployed can help improve their cost-effectiveness

10.15185/izawol.288 288 Wunsch, C

by Conny Wunsch

Activation programs, such as job search assistance, training, or work experience programs for unemployed workers, typically initially produce negative employment effects. These so-called “lock-in effects” occur because participants spend less time and effort on job search activities than non-participants. Lock-in effects need to be offset by sufficiently large post-participation employment or earnings for the programs to be cost-effective. They represent key indirect costs that are often more important than direct program costs. The right timing and targeting of these programs can improve their cost-effectiveness by reducing lock-in effects.

What effect do vocational training vouchers have on the unemployed?

Vouchers can create a market for training but may lengthen participants’ unemployment duration

10.15185/izawol.316 316 Strittmatter, A

by Anthony Strittmatter

The objective of providing vocational training for the unemployed is to increase their chances of re-employment and human capital accumulation. In comparison to mandatory course assignment by case workers, the awarding of vouchers increases recipients’ freedom to choose between different courses and makes non-redemption a possibility. In addition, vouchers may introduce market mechanisms between training providers. However, empirical evidence suggests that voucher allocation mechanisms prolong the unemployment duration of training participants. But, after an initial period of deterioration, better long-term employment opportunities are possible.