Direct and Indirect Effects of Subsidized Dual Apprenticeships

Abstract

Public interventions in the apprenticeship market often aim to increase demand or returns. We set up a double-sided experiment with youth and firms to analyse a subsidized dual apprenticeship program. This intervention seeks to relax financial constraints for youth by offering a wage subsidy and to make apprenticeship more attractive by providing vocational training in technical skills that complements on-the-job training. We document a large increase in youth participation in apprenticeship, yet the inflow of apprentices induces little crowding out of traditional apprentices in firms. The intervention leads to an increase in youth demand for apprenticeship, enabling firms to fill open apprenticeship positions. The subsidy compensates apprentices for low wages but does not alleviate financial constraints. Consistent with the dual training component contributing to an increase in youth demand for apprenticeship, youth perform more complex tasks and have higher earnings 4 years after the start of the experiment. © The World Bank 2024. Published by Oxford University Press on behalf of The Review of Economic Studies Limited.

Keywords

Author Keywords

Apprenticeship Vocational training Training employment dual training Africa Demand for training Direct and indirect effects Equilibrium effects Field experiment Micro- and small enterprises Wage subsidy

Index Keywords

Employment training Vocational education wage experimental study young population small and medium-sized enterprise subsidy system

Author Affiliations

ENSAE, Rennes, France

The World Bank, USA, Washington, D.C., United States

Funding & Acknowledgements

Eidgenössische Technische Hochschule Zürich, ETH

Funding text 1: Funding from the World Bank Research Support Budget, Skills, DIME i2i, and Jobs Umbrella Trust Funds, as well as the JPAL PPE initiative, is gratefully acknowledged.; Funding text 2: This article is the result of a collaboration with the World Bank and the government of C\u00F4te d\u2019Ivoire. We are particularly thankful to Adama Bamba, Hermann Toualy, Ismahel Abdoul Barry, and Cesar Gbeugr\u00E9 Toassa at BCPE; Traor\u00E9 Bamoudien and Ouattara Abdoul Kadher at AGEFOP; and Hamoud Wedoud Abdel Kamil at the World Bank. We thank Sondo Eloi Somtinda for outstanding field coordination throughout the study, Jo\u00EBl Farronato for excellent baseline survey coordination, and Nicolo Tomaselli, Henriette Hanicotte, Dimanche Allo, and Angui Kacou for leading midline and endline data collection. Marina Tolchinsky, Matthew Olckers, Fatine Guedira, Eva Lestant, Horacio Vera Cossio and Daniel Corredor Vallejo provided excellent contributions to data analysis. Daniel Corredor Vallejo prepared the final replication package. Johanne Buba, Deon Filmer, Leonardo Iacovone, and seminar participants in Bern, Cairo, the Bank of Italy, ETH Z\u00FCrich, Florence, Geneva (IHEID Graduate Institute), ILO, Fribourg, Oxford, Lugano, Mannheim, Neuchatel, Z\u00FCrich, and the World Bank provided useful comments and suggestions. All errors and omissions are our own. The article\u2019s findings, interpretations, and conclusions are those of the authors and do not necessarily represent the views of the World Bank or the government of C\u00F4te d\u2019Ivoire. The study design, peer-reviewed before the experiment\u2019s launch, is filed as an attachment in AEARCTR-0002726. Funding from the World Bank Research Support Budget, Skills, DIME i2i, and Jobs Umbrella Trust Funds, as well as the JPAL PPE initiative, is gratefully acknowledged.

World Bank Group, WBG

Funding text 1: Funding from the World Bank Research Support Budget, Skills, DIME i2i, and Jobs Umbrella Trust Funds, as well as the JPAL PPE initiative, is gratefully acknowledged.; Funding text 2: This article is the result of a collaboration with the World Bank and the government of C\u00F4te d\u2019Ivoire. We are particularly thankful to Adama Bamba, Hermann Toualy, Ismahel Abdoul Barry, and Cesar Gbeugr\u00E9 Toassa at BCPE; Traor\u00E9 Bamoudien and Ouattara Abdoul Kadher at AGEFOP; and Hamoud Wedoud Abdel Kamil at the World Bank. We thank Sondo Eloi Somtinda for outstanding field coordination throughout the study, Jo\u00EBl Farronato for excellent baseline survey coordination, and Nicolo Tomaselli, Henriette Hanicotte, Dimanche Allo, and Angui Kacou for leading midline and endline data collection. Marina Tolchinsky, Matthew Olckers, Fatine Guedira, Eva Lestant, Horacio Vera Cossio and Daniel Corredor Vallejo provided excellent contributions to data analysis. Daniel Corredor Vallejo prepared the final replication package. Johanne Buba, Deon Filmer, Leonardo Iacovone, and seminar participants in Bern, Cairo, the Bank of Italy, ETH Z\u00FCrich, Florence, Geneva (IHEID Graduate Institute), ILO, Fribourg, Oxford, Lugano, Mannheim, Neuchatel, Z\u00FCrich, and the World Bank provided useful comments and suggestions. All errors and omissions are our own. The article\u2019s findings, interpretations, and conclusions are those of the authors and do not necessarily represent the views of the World Bank or the government of C\u00F4te d\u2019Ivoire. The study design, peer-reviewed before the experiment\u2019s launch, is filed as an attachment in AEARCTR-0002726. Funding from the World Bank Research Support Budget, Skills, DIME i2i, and Jobs Umbrella Trust Funds, as well as the JPAL PPE initiative, is gratefully acknowledged.

Grant: AEARCTR-0002726

Funding text 1: Funding from the World Bank Research Support Budget, Skills, DIME i2i, and Jobs Umbrella Trust Funds, as well as the JPAL PPE initiative, is gratefully acknowledged.; Funding text 2: This article is the result of a collaboration with the World Bank and the government of C\u00F4te d\u2019Ivoire. We are particularly thankful to Adama Bamba, Hermann Toualy, Ismahel Abdoul Barry, and Cesar Gbeugr\u00E9 Toassa at BCPE; Traor\u00E9 Bamoudien and Ouattara Abdoul Kadher at AGEFOP; and Hamoud Wedoud Abdel Kamil at the World Bank. We thank Sondo Eloi Somtinda for outstanding field coordination throughout the study, Jo\u00EBl Farronato for excellent baseline survey coordination, and Nicolo Tomaselli, Henriette Hanicotte, Dimanche Allo, and Angui Kacou for leading midline and endline data collection. Marina Tolchinsky, Matthew Olckers, Fatine Guedira, Eva Lestant, Horacio Vera Cossio and Daniel Corredor Vallejo provided excellent contributions to data analysis. Daniel Corredor Vallejo prepared the final replication package. Johanne Buba, Deon Filmer, Leonardo Iacovone, and seminar participants in Bern, Cairo, the Bank of Italy, ETH Z\u00FCrich, Florence, Geneva (IHEID Graduate Institute), ILO, Fribourg, Oxford, Lugano, Mannheim, Neuchatel, Z\u00FCrich, and the World Bank provided useful comments and suggestions. All errors and omissions are our own. The article\u2019s findings, interpretations, and conclusions are those of the authors and do not necessarily represent the views of the World Bank or the government of C\u00F4te d\u2019Ivoire. The study design, peer-reviewed before the experiment\u2019s launch, is filed as an attachment in AEARCTR-0002726. Funding from the World Bank Research Support Budget, Skills, DIME i2i, and Jobs Umbrella Trust Funds, as well as the JPAL PPE initiative, is gratefully acknowledged.

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Direct and Indirect Effects of Subsidized Dual Apprenticeships

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