Train Drain? Access to Foreign Workers and Firms' Provision of Training

Maria Esther Oswald-Egg and Michael Siegenthaler
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Maria Esther Oswald-Egg: ETH Zurich

No 15902, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Does better access to foreign workers reduce firms' willingness to provide general skills training to unskilled workers? We analyze how the opening of the Swiss labor market to workers from the European Union affected the number of apprenticeship positions that firms provide. We exploit that the availability of foreign workers increased more in firms close to the border because they gained unrestricted access to cross-border workers from Switzerland's neighboring countries. Our Difference-in-Differences estimates suggest that firm-provided training to unskilled workers and access to foreign workers are not necessarily substitutes: opening the borders did not have a statistically significant effect on apprenticeship provision. Using unique data on firms' costs and motives to train apprentices, we show that the greater availability of foreign workers reduced firms' incentive to train because hiring skilled workers externally became cheaper, among others because new hires became more productive from the start. Positive impacts on firm growth worked in the opposite direction.

Keywords: immigration policy; immigration; hiring costs; free movement of workers; firm-provided training; cross-border workers; apprenticeships; labor mobility; vocational education and training (search for similar items in EconPapers)
JEL-codes: J24 J63 M53 (search for similar items in EconPapers)
Pages: 66 pages
Date: 2023-01
New Economics Papers: this item is included in nep-eur, nep-int and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published - published in: Labour Economics, 2023, 85, 102436

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Journal Article: Train drain? Access to foreign workers and firms’ provision of training (2023)
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