School-based vocational or workplace-based apprenticeship training ? evidence on the school-to- work transition of Hungarian apprentices

Workplace-based training has been praised for its effectiveness in smoothing the school to work transition. Apprentices have been shown to have lower initial unemployment probabilities as compared to other secondary-school graduates. There are but a handful of studies that can convincingly show that the effect of apprenticeship training on labor market outcomes is causal. This study provides additional support for the argument that workplace-based practical training increases initial employment probabilities. Using a unique individual panel database which includes, among others, extensive controls for individual skills, school attainment and parental background, it is shown that Hungarian students in the lowest, non-college bound vocational training track have about a 10- 15% higher probability of employment after leaving school, as opposed to graduates of the same track, who carried out their practical training within the school. This effect seems to be stable across industries. The data also shows that apprentices, when employed, earn the same amount of money, but are more likely to receive long-term contracts compared to non-apprentices. Moreover, apprentices who move to another industry, are less likely to receive long-term contracts compared to “stayers”, but are more likely to receive long term contracts compared to non-apprentices. These results suggests that it is not the increased specific skills of apprentices, but rather the increased screening and maybe the signaling effect of apprenticeship training that smoothes the school to work transition