Mandatory Apprenticeship Training in Firms
Abstract: We quantify the effect of training apprentices on firms and aggregate welfare, exploiting a unique reform to apprenticeship regulation in Colombia. The reform mandates training in firms by setting minimum and maximum apprentice quotas that vary discontinuously in the number of full-time workers. We document strongly heterogeneous firm responses across sectors, revealing differences in the net cost of training. In sectors with high skill requirements, firms decrease their size and bunch just below the regulation thresholds to avoid training apprentices. In contrast, firms in low-skill sectors increase their size to qualify for more apprentices. Guided by these reduced-form findings, we develop a structural model featuring firms with heterogeneous training costs. We find small static effects on aggregate output despite the sizeable labor input responses. Yet, our results indicate potentially large benets to both firms and apprentices when training increases the future supply of productive workers. Finally, we show that counterfactual policies that consider heterogeneity across sectors can deliver similar benefits from training while inducing fewer distortions in the firm size distribution and in the allocation of resources across sectors.
