What we’re reading about enhancing apprenticeship for youth and firms

Evidence on the effectiveness of vocational and skills training programs has vastly expanded over the last decade, with mixed results. Traditionally, apprenticeship entails on-the-job training with a master craftsperson. It is at times “dual” when combined with center-based vocational training.

Apprenticeship is an important institution in several developed countries, but also one of the main sources of skills training for youths in many low-income and lower-middle-income economies. While the enhancement of traditional apprenticeship has received renewed policy attention in recent years, it still attracts relatively limited investments.

Upgrading apprenticeship systems can improve productivity and earnings for youths. It can also have beneficial effects for the micro and small enterprises (including informal) that account for the bulk of employment in developing countries.

A flurry of recent work has analyzed how to improve apprenticeship, with new insights for policy and programming.

First comes the question of how to improve youth demand for training. Policy interventions can foster youth entry into apprenticeship by improving the matching of youths with firms or setting up dual apprenticeships that enhance training quality and make it more attractive.

Second, evidence on the impacts of apprenticeship on youths has provided some encouraging results. Various economic or well-being outcomes improved in the short-term in Uganda or Nigeria, and earnings increased by 15% two years after the end of the program in Côte d’Ivoire. Important questions on gender differences and overall cost-effectiveness remain, however.

Lastly, there are open debates on the impacts of apprenticeship on firms and firms’ overall willingness to train. National reforms of apprenticeship regulations have increased the hiring of apprentices by firms in low-skills sectors in Colombia, while the entry of subsidized apprentices has fueled firm expansion with little crowding out in Côte d’Ivoire and increased firm profits in Ghana.

Several ongoing operations led by the World Bank’s Social Protection and Jobs and Education Global Practices are trying new approaches to improve national apprenticeship systems. At the Development Impact Evaluation (DIME) Department, we have started new collaborative efforts to learn from those programs. Feel free to get in touch with our team at dime@worldbank.org for more information!

Essential readings

• While vocational and skills training programs have had mixed results, those that included practical experience, soft-skills training, and job referrals often increased hours worked and earnings for participants. (J-PAL, August 2022)
• This book chapter provides a broad overview of the literature on apprenticeship, summarizing advancements in theoretical and empirical research, assessing the benefits of apprenticeship for individuals, and discussing the role of institutions. (Wolter et al., Handbook of the Economics of Education, 2011)
• A recent International Labor Organization (ILO) report reviews informal apprenticeship in developing countries, compiling country-level findings by the ILO and others over the last 15 years. (Hofmann et al., ILO Working Paper 49, February 2022)
• This paper offers a theory on why firms train apprentices, suggesting that they offer training when the quitting rate is low to gain information on trainees’ abilities. (Acemoglu & Pischke, The Quarterly Journal of Economics, February 1998)
• In Ghana, matching young people with small firms led to an increase in firm size of approximately half a worker and an increase in firm profits of approximately 10% for each apprentice placement offered. (Hardy & McCasland, American Economic Journal: Applied Economics, Forthcoming)
• In Cote d’Ivoire, subsidized dual apprenticeships lead to a large increase in youth participation in apprenticeship without crowding-out traditional apprentices in firms. Consistent with the dual training making apprenticeship more attractive, youth have higher earnings by 15% two years after the end of the program. (Crépon and Premand, Working Paper 2019)
• In Colombia, a study found that firms in high-skill sectors tend to avoid training apprentices due to high training costs, while firms in low‐skill sectors hire as many apprentices as possible. (Caicedo et al., Econometrica, March 2022)
• Women’s participation in an apprenticeship program in Malawi was hampered by family obligations, resulting in poor training experiences and no improvements in labor market outcomes in the short run. (Cho et al., Working Paper, June 2016)
• In Nigeria, a program called Mafita that aimed to provide marginalized youth with access to skilled work or productive self-employment had a positive impact on employment and productivity, job search behavior, and economic welfare, although the program’s cost-effectiveness remains a question. (Crawford et al., World Bank report, April 2021)

Broader jobs agenda

• A field experiment with individuals in a refugee camp found that employment improves psychosocial well-being significantly more than cash alone, reflecting the nonmonetary value of work despite material poverty. (Hussam et al., American Economic Review, November 2022)
• Examining the intersection of age with gender and race, this study indicated that age discrimination is more prevalent among Black British men and women compared to White British men and women, and Black British women experience the highest level of age discrimination. (Drydakis et al., Employee Relations, September 2022)
• This paper considered pension systems in sub-Saharan Africa, suggesting countries move toward a targeted universal pension system financed through public resources, but this shift should be gradual so as not to lead to fiscal strain. (Nyangoro & Njenga, UNU-WIDER Working Paper, August 2022)
• Drawing on training pilots in Uganda, Nigeria and Rwanda, a recent report provides operational recommendations on designing and implementing gender-inclusive digital literacy programs. (World Bank, 2022)

COVID-19 and jobs

• Using psychometric credit scoring as a substitute for collateral on microfinance loans up to US$7,500 had a positive impact on women’s access to credit and survival of their firms during the COVID-19 pandemic and conflict in Ethiopia. (Alibhai et al., World Bank, November 2022)
• Looking at informal business survival, this paper found that the annual entry and exit rates for tax-registered household businesses were around 5-6%, with an additional 25% suspending operations each year pre-pandemic, which increased to 40% after the pandemic began in 2020. (Islamaj et al., World Bank, November 2022)
• The 2021 high-frequency phone surveys provide information on changes in employment and income, food insecurity, and access to health, education, and financial services in several Latin America and the Caribbean countries since phase one of the pandemic. (World Bank & UNDP, November 2022)
• In Tonga, a recent note shares preliminary findings and policy implications from the high-frequency phone surveys to assess and monitor economic and social impacts of crises including the Hunga Tonga-Hunga Ha'apai volcanic eruption, subsequent tsunami, and COVID-19 outbreak. (World Bank, October 2022)

This blog is based on the November 2022 edition of the Knowledge4Jobs newsletter, curated by the World Bank’s Jobs Group and Labor and Skills Global Solutions Group. Click here to sign up for the Knowledge4Jobs newsletter.