Apprenticeships improve employment prospects, but do they help to grow local economies?

11th September, 2015

Earlier this week we published our latest evidence review on the effect of apprenticeships.

Given the considerable policy interest in this area, there’s already a whole set of reports and opinion pieces discussing the costs and benefits of apprenticeships. As ever, our report tries to add to our understanding by identifying evaluations that try to carefully identify the causal impact of apprenticeships – that is, what changes for workers or firms as a result of participating. In common with many of our other reviews, these evaluations represent a small subset of the large number of studies available (27 out of more than 1,250 studies met our minimum criteria).

The findings are broadly positive – at least in terms of improving employment prospects. Of the 9 studies that looked at employment, 7 found positive effects for those completing apprenticeships. This compares pretty favourably to many of the other policy areas that we have looked at. Although, interestingly, we also found these kind of success rates for (generally) shorter employment training provision providing that included an in-firm component. This raises an important question about cost-effectiveness of the two types of approaches – one which is, unfortunately, difficult to answer with the evidence available (we’ll do some further work over the next few months that tries to look at this issue). The evidence is a little less positive when it comes to the effects on wages and on encouraging further training – although even here a majority of studies usually show positive effects.

Turning from workers to firms, we found much less evidence (only a couple of studies). There is some evidence from these studies that firms participating in apprenticeships experience economic gains, such as higher productivity or profits. This fits with survey evidence, but more impact evaluations are needed – especially if expanding the number of apprenticeships is going to need firms who don’t currently offer apprenticeships to start doing so.

This lack of good quality evidence on the benefits to firms, highlights one of the big challenges for the government’s drive to increase the number of apprenticeships. Another concerns the lack of evidence on how the detailed design of apprenticeships affect employment returns, completion rates and take-up. For all the strong opinions out there, we have precious little evidence to help shape the development of future apprenticeships.

In this context, it’s worth highlighting a final point. Despite the fact that the evidence we review in our report is broadly positive, it is difficult to extrapolate from this to the effect of a large scale expansion in apprenticeships. The government points to the evidence of positive effects, while critics point to the dangers that pushing out low quality apprenticeships will dramatically lower (or even eliminate) those returns. This is one of those occasions on which both sides could be right – but we won’t know what’s actually happening unless we carefully monitor and evaluate the returns to expanded apprenticeship provision. There’s no reason why we can’t do this, as well as use variation at local level to try to answer questions about the effectiveness of different design aspects of apprenticeships. In the end, a little more boring than huge sweeping arguments about policy, but more likely to improve effectiveness in the long run.  

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