Hiring costs for skilled workers and the supply of firm-provided training

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. This paper analyzes how the costs of hiring skilled workers from the external labor market affect a firm's supply of training. Using administrative survey data with detailed information on hiring and training costs for Swiss firms, we find evidence for substantial and increasing marginal hiring costs. However, firms can invest in internal training of unskilled workers and thereby avoid costs for external hiring. Controlling for a firm's training investment, we find that a one standard deviation increase in average external hiring costs increases the number of internal training positions by 0.7 standard deviations.JEL Classification: J23, J24, J32

Apprentice Poaching in Regional Labor Markets

“…Especially regarding apprenticeship completers, who are regionally not very mobile, the better supply of apprenticeship completers (from other firms) in dense regions may be a potent reason not to invest as much in own training. This interpretation receives further support from the literature: Blatter et al (2015) investigate the costs of hiring skilled workers in Switzerland.…”

“…We then analyze the effect of regional competition on the mobility of apprenticeship completers and on poaching. According to theoretical predictions and empirical findings in the literature (Blatter et al, 2015), we expect that higher labor market competition is associated with a lower retention rate after apprenticeship training and a higher poaching incidence. Furthermore, we analyze whether poaching victims respond to poaching by reducing their training activity.…”

“…The last reason for lower hiring costs in agglomerations is the higher average quality of job candidates, meaning that less "lemons" have to be screened before finding a good match (Blatter et al, 2015).…”

Make or buy: train in-company or recruit from the labour market?

“…To the best of our knowledge, the only studies that have thus far directly compared the alternatives of in-house IVET and external labour market recruitment are those by Bellmann and Janik (2007) in Germany and Blatter et al (2012) in Switzerland. Starting with the degree of uncertainty about how many apprentices a firm can hire at the completion of the apprenticeship period, Bellman and Janik analyse possible correlations, differentiating between the production and service sectors.…”

“…Moreover, companies facing a high degree of uncertainty more frequently opt for external labour market recruitment. Blatter et al (2012) consider how costs affect the choice between recruitment and training. According to their results, companies are particularly likely to invest in additional apprenticeship places when the average costs of recruiting workers from the external labour market increase.…”