For dual apprenticeship systems to be successful, firms must be willing to train apprentices, which in turn depends on the expected costs and benefits of training. In traditional apprenticeship countries, monitoring systems are supposed to ensure sufficiently high training quality and that firms do not exploit apprentices as 'cheap labor.' Moreover, standardized examinations at the end of the training ensure that skills are transferable to other employers. In equilibrium, a firm is willing to invest in apprenticeship training if the expected return on the training investment is sufficiently high, while individuals weigh the costs and benefits of apprenticeship training and other educational tracks. Due to technological progress, demographic change, and macroeconomic fluctuations, a firm's demand for and the supply of apprentices shift over time. This chapter discusses the dynamics of apprenticeship markets and the role of institutions, and why such knowledge is helpful to design effective and efficient policies. © Ellu Saar and Péter Róbert 2025.
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