Do workers who complete an apprenticeship that provides higher cognitive, social, or digital skills earn higher wages over the long term?

Christina Langer of the Harvard Kennedy School joined us on September 26, 2022, to share her research about the German apprenticeship system when for our first seminar of the fall 2022 quarter, “The Value of Skills: New Evidence from Apprenticeship Plans.”

We construct novel measures of worker skills that are directly relevant on the labor market, objective, and highly detailed. To do so, we exploit the unique setting of the German apprenticeship system, which mandates that the same skills are developed in a particular apprenticeship regardless of the training location. Skill requirements of apprenticeships are codified in state-approved, nationally standardized apprenticeship plans. These plans not only provide information on the skill content of apprenticeships, containing almost 20,000 different skills, but also on the exact duration a specific skill is learnt. We link the skill measures to administrative labor market data covering more than 40 years. Following apprenticed workers over their careers, we find that workers who completed an apprenticeship that provides higher cognitive, social, or digital skills earn higher wages over long-run horizons. The returns to an additional month of learning these skills amounts to one-tenth to one-fifth of the return to a full year of schooling. Exploiting the long time coverage of our administrative data, we document that particularly returns to digital skills have soared since the 1990s. Returns to social skills have also increased strongly over time, while the increase in returns to cognitive skills is more muted.

Christina Langer is a PhD student at the Catholic University of Eichstätt-Ingolstadt and a guest researcher at the ifo institute in Germany. She joined the Growth Lab at Harvard University as an Associate in February 2020 and is a Visiting Research Fellow at the Project on Workforce at Harvard since January 2022. Her research interests cover the fields of empirical labor economics and economics of education with a special focus on investigating recent labor market phenomena and differences in returns to skills across workers using innovative data (e.g., job ad data and self-collected text data on the German apprenticeship system). She holds a Master of Science with honors in Economics from the University of Regensburg.