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The Effect of Business Cycle Expectations on the German Apprenticeship Market: Estimating the Impact of COVID-19

Samuel Mühlemann (), Harald Pfeifer () and Bernhard Wittek ()
Additional contact information
Samuel Mühlemann: University of Munich
Bernhard Wittek: LMU Munich

Authors registered in the RePEc Author Service: Samuel Muehlemann ()

No 13368, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: A firm's expectation about the future business cycle is an important determinant of the decision to train apprentices. As German firms typically train apprentices to either fill future skilled worker positions, or as a substitute for other types of labor, the current coronavirus crisis will have a strong and negative impact on the German economy according to the current business cycle expectations of German firms. To the extent that the training decision of a firm depends on its perception of the business cycle, we expect a downward shift in the firm's demand for apprentices and consequently also a decrease in the equilibrium number of apprenticeship contracts. We analyze German data on the apprenticeship from 2007 to 2019 and apply firstdifferences regressions to account for unobserved heterogeneity across states and occupations, allowing us to identify the association between changes in two popular measures of business cycle expectations (the ifo Business Climate Index and the ifo Employment Barometer) and subsequent changes in the demand for apprentices, the number of new apprenticeship contracts, unfilled vacancies and unsuccessful applicants. Taking into account the most recent data on business cycle expectations up to May 2020, we estimate that the coronavirus-related decrease in firms' expectations about the business cycle can be associated with a predicted 9% decrease in firm demand for apprentices and an almost 7% decrease in the number of new apprenticeship positions in Germany in 2020 (-34,700 apprenticeship contracts; 95% confidence interval: +/- 8,800).

Keywords: coronavirus; COVID-19; apprenticeship market; business cycle expectations (search for similar items in EconPapers)
JEL-codes: J23 J24 M53 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2020-06
New Economics Papers: this item is included in nep-bec, nep-eur and nep-lma
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Citations: View citations in EconPapers (6) Track citations by RSS feed

Published - published in: Empirical Research in Vocational Education and Training, 2020, 12, Article 8 (2020)

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Related works:
Working Paper: The effect of business cycle expectations on the German apprenticeship market: Estimating the impact of Covid-19 (2020) Downloads
Working Paper: The effect of business cycle expectations on the German apprenticeship market: Estimating the impact of Covid-19 (2020) Downloads
Working Paper: The effect of business cycle expectations on the German apprenticeship market: Estimating the impact of Covid-19 (2020) Downloads
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