Evidence topic: Apprenticeships

Evidence review (PDF) published in September 2015.

Apprenticeships can improve young people’s prospects of earning better wages and securing long-term employment.

What are apprenticeships?

While apprenticeship models vary across countries, they share many common features. We define apprenticeships as follows:

Paid employment within a firm, alongside training that is usually provided by government, the employer, or a trade union, targeted specifically at school leavers (level of education varies by type of apprenticeship scheme). The apprentice often acquires a formal qualification by the end of the apprenticeship.

Although apprenticeship schemes do not necessarily need government support, such support is very common.

The rationale: How do apprenticeships deliver growth?

Apprenticeships aim to improve individuals’ employment and wage outcomes by raising their human capital. Apprentices should be more employable after the programme. This should raise lifetime wages, reduce the risk of future unemployment, and improve prospects of career progression.

Apprenticeships may also help employers, by providing them with more skilled and productive employees. Apprentices may also be more loyal and contribute more effort than other entry-level workers.

Firms tend to underinvest in apprenticeships because apprentices may be poached by other employers after completing the programme. To address this market failure, governments often cover some of the cost of the programme through grants, wage subsidies or a combination.

Evidence review: What does the evidence say about apprenticeships?

Our evidence review considered more than 1,250 policy evaluations and evidence reviews from the UK and other OECD countries. It found 27 impact evaluations that met our minimum standards.

What the evidence showed:

• There is some evidence that apprenticeships improve skill levels and stimulate further training or study.
• Apprenticeships can increase wages, although in a couple of evaluations effects are negative. Impacts also vary by type of participant.
• Apprenticeships tend to have a positive effect on participants’ subsequent employment (and also reduce unemployment post-programme).
• Level 3 or higher apprenticeships deliver substantially higher lifetime wage gains relative to lower-level apprenticeships (based on the limited UK evidence available).
• There is some evidence that apprenticeships are more likely to increase employment than other forms of employment training (unless that training also involves an in-firm element). The evidence of impact on wages is more mixed and appears to vary by gender.
• There is some evidence that identifies mechanisms that may increase entry into apprenticeships and attendance during the programme (e.g. pre-qualifications, higher wages and subsidies to individuals). However, we have less evidence on what works to ensure people complete apprenticeships.

Where the evidence was inconclusive:

• It is unclear whether the duration of the apprenticeship matters for effects on wages or employment (although longer apprenticeships that deliver higher qualifications may have more positive effects).

Where there was lack of evidence:

• There is some evidence 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.
• There is too little evaluation evidence to draw clear conclusions on whether apprenticeships work better in some sectors than others.
• There is some evidence that post-apprenticeship moves can increase wages although effects depend on circumstances.
• There is no impact evaluation evidence looking at the effect of apprenticeships on a given local area (rather than individual participants or firms).
• There is no impact evaluation evidence comparing the effects of nationally run programmes versus locally run programmes.
• Existing ex-ante modelling suggests that the economic benefits of apprenticeships comfortably outweigh their costs. However, only one of the impact evaluations provides cost data in a form which allows us to calculate ex-post benefit-cost ratios for that programme.
• None of the shortlisted studies look at the effects of substantially scaling up apprenticeship provision, as is currently happening in the UK. We need more evidence on whether identified benefits also hold in a larger programmes. Given the other substantial changes to the UK apprenticeship system in the past decade and a half, more up to date UK impact evaluation evidence is also needed.

Lessons:

• This evidence review highlights the need for more impact evaluations on the economic case for apprenticeships as these are being rolled out.
• Central government should set up evaluations of scheme design and its effect on take-up, completion, and outcomes. This is particularly important given devolution of skills budgets to cities such as London and Manchester. Central and local policymakers should work together to design robust evaluation that increases our understanding of how to improve the design of apprenticeships.
• Any policy should carefully consider how to recruit firms to provide apprenticeships, and trainees to fill them. A better understanding of the costs and benefits to firms will help in this, as will a better understanding of which policy design aspects increase take-up and reduce drop-out.
• More research is required looking at outcomes for firms. Surveys of firms who offer apprenticeships suggest those firms see clear benefits, but they may not be representative of all employers.
• While the evidence suggests that higher level apprenticeships (specifically, Level 3 and above) may offer better outcomes, it does not currently tell us whether this is because stronger candidates gravitate towards more demanding programmes. If this is the case, policymakers need to consider how to address the needs of those ‘left behind’ by this type of apprenticeship offering.
• Policymakers should look to undertake systematic comparisons that cover different kinds of apprenticeship model – for example, the German system versus a more decentralised system.

Downloads:

Toolkits: Advice on designing apprenticeship programmes

In addition to the evidence review, we have developed a set of policy design toolkits to help you to make informed decisions when developing apprenticeship programmes. Each toolkit covers a specific aspect of programme delivery. The toolkits consider a broader evidence base than the evidence review.

Case studies: How to evaluate apprenticeships

To help improve evaluation of apprenticeships, we have a series of case studies that give examples of how previous apprenticeship programmes have been evaluated.

Each evaluation case study has met our minimum standard of evidence, which means it (at a minimum) compares what changed for the individuals that benefited from an intervention with what changed over the same time frame for otherwise comparable individuals that didn’t benefit, or that received a different type of intervention. The case studies use two different approaches to achieving this comparison. One study uses a randomised control trial (RCT), the gold standard of evaluation, and the others use statistical approaches to try to ‘strip out’ the impact of the other factors that could have affected outcomes in both the treatment group and the comparator group.

Read more about how to evaluate, and why we think it can be helpful to learn from previous approaches in our how to evaluate guide. You can also read more about different evaluation methods in our scoring guide .