On the productivity effects of training apprentices in Hungary: evidence from a unique matched employer–employee dataset

Abstract

This paper investigates the effects of training apprentices on the productivity of Hungarian firms. In order to retrieve a causal estimate of the effects of apprenticeship training on firm performance, we apply a set of dynamic panel data estimation techniques. We create a unique administrative matched employer–employee panel dataset containing over 40,000 employers in Hungary over the period between 2003 and 2011 in the manufacturing, construction, wholesale and retail, and hotels and restaurants sector. Our results indicate that an increase in the share of apprentices (per full-time equivalent worker) decreases the productivity of Hungarian firms in all four sectors. Further, we observe that retention rates of apprentices are low and further slacken in the final years of observation.