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Hungary - new findings on short-term labour market effects of apprenticeship training

ReferNet Hungary

Apprenticeship training has been praised recently for its effectiveness in easing school-to-work transition of non-college-bound students. In most countries with low youth unemployment there is some type of effective apprenticeship scheme in place. However, measuring effects of apprenticeship training relative to school-based VET on labour market outcomes has been a challenge.

There are European studies suggesting that positive effects of apprenticeship on youth unemployment are temporary at best (European Commission, 2012). Recent research results from Hungary arrive at similar conclusions (Horn, 2014).

An empirical study of benefits of apprenticeship-type schemes was the first conducted in eastern Europe. It is based on data from the Hungarian life course survey (HLCS). The study compares apprentices with non-apprentices within the educational track using a rich database, observable characteristics and local labour-market fixed effects to control potential selection bias.

HLCS is a panel survey which followed 10 022 young people over six years. Students involved finished 8th grade of primary school (ISCED 2) in 2006. The survey collected various data from the selected cohort, such as school achievements, marks, family background, labour market participation. Results of the 2006 mathematics and literacy national assessment of basic competences (NABC) (OECD, 2010) for each participant were also taken into consideration. The study was based on a representative sample of 1 105 students attending vocational training institutions.

The study’s main finding is that right after graduation students who participated in apprenticeship training have a small but statistically significant advantage in finding a job compared to those not enrolled in such training. However, a month later the difference is no longer significant, and after a year it fully disappears. Moreover, the statistically significant difference (8-10%) between the two groups one month after graduation can be accounted for by a specific subgroup: those who did their apprenticeships in large companies have a 38% higher chance of getting a job than those trained at school.

This difference may be explained by the fact that large companies have more resources and have accumulated more experience in providing training. However, as Horn argues, it is also possible that the difference is driven by unobserved individual characteristics, such as motivation and commitment of apprentices. This argument is supported by the finding that company size does not seem to influence labour market success of young graduates for whom apprenticeship placements were arranged by their training institutions.

The study concludes that in uncoordinated and decentralised apprenticeship systems, such as the Hungarian, there is no difference in labour market advantages - not even short-term - between those who participate in apprenticeship training and those who do not.

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