The h le Approach To achieve this we need 1. a model of the education choice This allows us to associate incentives from welfare programmes with earlier choices 2. This model must be linked to career choices and job mobility This allows us to study how wage growth may be affected
The Approach To achieve this we need: 1. A model of the education choice • This allows us to associate incentives from welfare programmes with earlier choices 2. This model must be linked to career choices and job mobility • This allows us to study how wage growth may be affected
Overall aims of the paper 1. To examine the relative benefits of formal versus informal on-the-job training Returns and their source Labour market Flexibility To model wage formation and identify the sources of wage grow th 3. To create a framework where the implications of welfare policies can be analysed in a life-cycle context with all their dynamic implications
Overall aims of the paper 1. To examine the relative benefits of formal versus informal on-the-job training. • Returns and their source • Labour market Flexibility 2. To model wage formation and identify the sources of wage growth. 3. To create a framework where the implications of welfare policies can be analysed in a life-cycle context with all their dynamic implications
More specific questions relating to apprenticeship About 80% of Germans who stop school at 16 follow an apprenticeship training programme. The remaining 20% remain formally unskilled How valuable or otherwise is a formal vocational system? Does it reduce flexibility? How does it compare with less structured on-the -job training that typically occurs in the labour market How important are economic incentives for the choice of education?
More specific questions relating to apprenticeship • About 80% of Germans who stop school at 16 follow an apprenticeship training programme. The remaining 20% remain formally unskilled. • How valuable or otherwise is a formal vocational system? Does it reduce flexibility? • How does it compare with less structured on-the-job training that typically occurs in the labour market? • How important are economic incentives for the choice of education?
Why a model and not just a field experiment or a natural experiment The policy issue we are concerned with is longer term. It relates to the behaviour of future cohorts Even with a longer term perspective in mind we cannot envisage the existence of a control group How do changing incentives affect education choice We need to infer the impact of the policy from analogou effects implied by variations in the current environme To achieve our aim we need to specify structure and use observational data
Why a model and not just a field experiment or a natural experiment? • The policy issue we are concerned with is longer term. It relates to the behaviour of future cohorts. • Even with a longer term perspective in mind we cannot envisage the existence of a control group • We need to infer the impact of the policy from analogous effects implied by variations in the current environment: How do changing incentives affect education choice? • To achieve our aim we need to specify structure and use observational data
Introduction Data We use administrative data from German Social Security records These contain a calendar of all jobs with start and end date excluding civil service job They report the average daily wage either over the year or part thereof when a job change occurs. No averaging across jobs. They also report periods in apprenticeship because these are jobs-albeit very low paid
Introduction Data • We use administrative data from German Social Security records • These contain a calendar of all jobs with start and end date excluding civil service job • They report the average daily wage either over the year or part thereof when a job change occurs. No averaging across jobs. • They also report periods in apprenticeship because these are jobs – albeit very low paid