Apprenticeships are positions of paid work in a firm including training provided by the employer, typically leading to a formal qualification or title. They are often targeted specifically at school leavers and the apprentice often acquires a formal qualification by the end of the apprenticeship
How can apprenticeships deliver local economic growth?
Apprenticeships can improve local economic growth in a number of ways. They are intended to improve the skills, wages and future career progression of participating individuals. They can also impact on the productivity of those firms taking on apprentices.
Governments support apprenticeships because:
- Firms may not provide enough apprenticeships if they worry that trained workers will leave.
- Firms and workers may under-estimate the benefits of apprenticeships
- The public benefits of apprenticeships, e.g. in the form of higher local economic growth, may exceed the private benefits
In the UK, governments primarily support apprenticeships by splitting the cost of training the apprentice with the participating firm. The three million apprenticeships to be created in the UK by 2020 are to be funded by a levy on major employers. Firms can then access this funding and provide apprenticeships via an apprenticeship voucher.
What does the evidence on apprenticeships show?
There is some evidence that apprenticeships improve individual skills levels and stimulate further training. The evidence also shows that they have a positive effect on participants’ subsequent employment, although the effect on wages is not always positive.
Higher level apprenticeships deliver substantially higher lifetime wages relative to lower level ones.
At the firm level, there is some evidence to show that participating businesses see productivity and profit gains.
Our evidence review covers further findings on differences across sectors, on the duration of the apprenticeship and on a number of other areas of interest. You can download the review in full below, or find a table of other outcomes evaluated in the studies we reviewed.
What policy makers need to know when designing apprenticeship programmes
The existing evidence base provides some guidance on how to develop programmes to improve policy effectiveness. Some of this evidence is discussed in our evidence review, with additional evidence on particular aspects of programme design summarised in our toolkits.
We have policy design guidance on the following programme types:
- Mentoring is the provision of advice to improve take-up, completion or skills acquired for a programme.
- Financial Incentivesinclude the wages paid to the apprentice or subsidies given to the employer to improve take-up and completion of programmes.
- Pre-apprenticeshipsare programmes taken up before an apprenticeship to help improve take-up and the skills acquired on an apprenticeship.
What policymakers and academics need to know when evaluating apprenticeship programmes
Evaluating the causal impacts of apprenticeships is not easy and ideally participants would be randomised into a programme. Post-apprenticeship outcomes would then be evaluated for similar people who did and did not participate. In our initial evidence review we only found one evaluation which fully randomised participants.
This is particularly important in assessing apprenticeships because of the ‘self-selection’ of both the participating firms and individuals. Without randomisation employers may ‘cherry pick’ the most motivated and skilled participants, likely to progress without training, and firms may be selected that already provide the best training opportunities. This may overstate the benefits of these programmes. Similarly, the benefits of programmes targeted at ‘the hardest to help’ could be understated.
Apprenticeships can also be long-term and it can be a challenge to both keep apprentices on a programme and evaluate their progress during and after the programme. Finding ways to track participants is vital to understanding the long term impact.
To help practitioners evaluate apprenticeship programmes, we have pulled out examples of good practice in this area:
- Subsidised training for disadvantaged youth in Columbia (RCT) This study investigates the effects of a large subsidised training programme for disadvantaged youth in Colombia, introduced between 2002 and 2005.
- Employment policy reform in Italy (statistical approach) This study examines the effects of a package of employment policy reforms introduced in Italy in 2003.
- Apprenticeship Bonus in Germany (statistical approach) This study evaluates the Apprenticeship Bonus, a subsidy to employers for hiring additional apprentices introduced by the German Federal Parliament in July 2008.
- Training disadvantaged youth in Germany (statistical approach) This study evaluates a pilot project to support firms in training disadvantaged youth, who would not otherwise have been hired as apprentices.
You can learn more about how we rank evaluations at this page.