The impact of wages on the probability of completing an apprenticeship or traineeship

Making use of the National Centre for Vocational Education Research (NCVER) 'Apprentice and trainee destination survey', the primary focus of this research is the impact of wages on the decision not to continue with an apprenticeship or traineeship. The approach taken is to model three wages relevant to apprentices and trainees: the wage during training; the expected wage in alternative employment; and the expected wage on completion. The results of these models are then used as inputs into a model which estimates the impact of wages on the final probability of completing an...  [+] Show more

Making use of the National Centre for Vocational Education Research (NCVER) 'Apprentice and trainee destination survey', the primary focus of this research is the impact of wages on the decision not to continue with an apprenticeship or traineeship. The approach taken is to model three wages relevant to apprentices and trainees: the wage during training; the expected wage in alternative employment; and the expected wage on completion. The results of these models are then used as inputs into a model which estimates the impact of wages on the final probability of completing an apprenticeship or traineeship. The models also allow for a direct estimate of the short-term value of completion to be made by looking at the differences between the wages of those who did and those who did not complete. Overall, the conclusion is that wages do have some impact on the decision not to continue with an apprenticeship or traineeship but the effect is not consistent. Specifically, the difference between wages on completion and wages in alternative employment is significant in the trades, and the difference between wages during training and wages in alternative employment is significant for males in non-trade traineeships. For females in traineeships there is no significant relationship between wages and completion rates. In looking at the value of completion, the major point to emerge is that apprenticeships and traineeships are a bit of a mixed bag. For trade apprentices (specifically, electrotechnology and telecommunications, construction, and automotive and engineering) expected wages on completion significantly exceed expected wages in alternative employment. For most other occupations the value of completing the qualification is modest or even negative (notably, sales). This lack of a premium attached to completion suggests that there is a range of traineeships for which there is apparently little skills acquisition during the training job, or if there is the skills are not valued by the labour market over the general work experience obtained during the traineeship.