Abstract

(joint with Samuel Muehlemann, Harald Pfeifer and Hans Dietrich)

The G8 high school reform in Germany reduced minimum duration to obtain a high school diploma (Abitur) from 9 to 8 years. Implementation of the policy occurred statewide in different years. Eight years after implementation, high-school graduation take place for two cohorts in one year. This paper studies how the additional inflow of high educated trainees changed the apprenticeship market. First, to conjecture possible effects of a supply shock in one input, a theoretical model is presented that is based on a CES technology with heterogeneous inputs. Implementation across states (Länder) was realized during different years. This allows applying a variety of identification methods (difference-in-differences, FE panel estimation, Instrumental Variables regression) to identify and estimate the size effects of one-time supply shock in market for high-educated apprentices. Training firms almost fully and immediately absorbed the additional supply of high school graduates in the apprenticeship market, but no wage effects are found. In contrast with immigration studies no evidence is found for substitution effects between low and high educated apprentices. These outcomes point at an excess need for highly educated trainees by companies that use training as part of their regular production and development technology. Wages -- collectively bargained -- are too sticky and too low and show no differentiation between different levels of education. Wages for high educated apprentices are too low to clear the German market for apprenticeships.

Light lunch provided for registered participants; please register by November 22, 10:00 a.m. (registration link below seminar title)