Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/80024
Title: 

Should I stay or should I go? - The Effect of Performance Pay on the Retention of Apprenticeship Graduates

Authors: 
Rinawi, Miriam
Backes-Gellner, Uschi
Year of Publication: 
2013
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2013: Wettbewerbspolitik und Regulierung in einer globalen Wirtschaftsordnung - Session: Training and Apprenticeship D07-V1
Abstract: 
This paper investigates how training firms retain their apprenticeship graduates if they are embedded in labor markets without the frictions that the new training literature considers to be essential for investments in general human capital. We hypothesize that performance pay schemes are an additional firm-level tool to increase the retention of graduates. We argue that firms with performance pay schemes are more likely to engage in apprenticeship training than firms not offering performance pay. This paper uses representative data from a large employer-employee panel data set and accounts for unobserved heterogeneity by employing fixed-effects estimations. We find that the performance pay rate has a significantly positive effect on a firm's share of internal apprenticeship graduates. Our results can be interpreted as an indication that performance pay firms are more likely to invest in training, as they can successfully retain their graduates.
JEL: 
J24
J33
C23
Document Type: 
Conference Paper

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