Qualifications Improve Career Prospects but Generate High Costs
ResearchZEW Study on Training Opportunities for Students at French Universities
France has massively expanded firm-based training in recent years – including at university level all the way up to master’s degrees. A new study by ZEW Mannheim shows that, since the reform in 2018, the number of apprenticeship contracts has risen significantly, particularly in higher education. At the same time, public spending on apprenticeships rose from 5.5 billion euros in 2018 to at least 16 billion euros in 2023. The main benefit achieved is that training firms take on students with an apprenticeship contract after they graduate. Graduates who have completed an apprenticeship achieve better employment and pay outcomes than students who did not enter an apprenticeship.
“France is a special case in Europe because vocational training is strongly promoted not only through traditional firm-based training but also within the higher education system. Our findings show that this can make it easier for young people to enter the labour market – but it does not automatically result in more employment,” says Jérémy Hervelin, researcher at ZEW’s “Labour Markets and Social Insurance” Research Unit. “Particularly in the case of in-company apprenticeships within the higher education sector, the question arises as to whether unlimited public funding is efficient. If companies hire students with apprenticeship contracts primarily because this means that labour costs are subsidised by the state, funding mechanisms need to be designed in a more targeted manner.”
Retention as a strong labour-market advantage for individuals
Graduates with an apprenticeship contract fare better on the labour market after their graduation than graduates without such contract. Six months following graduation, 58% of graduates with an apprenticeship contract were employed; after one year, the rate was 67%, and after two years it was 72%. The employment rates were lower for graduates without an apprenticeship contract. The gap is particularly pronounced in the higher education system: One year after graduation, 75% of higher education graduates with an apprenticeship contract were in employment, while only 61% of higher education graduates who had not entered an apprenticeship were employed.
The study shows that this gap is mainly due to the fact that apprentices are often retained by the training firm. Those who are not retained have scarcely better prospects than comparable students who have not completed an apprenticeship.
High costs and weaker firm–apprentice matching after the reform
The fast expansion since 2018 has had side effects: On the one hand, the number of training firms has increased strongly, on the other hand, there are signs that the quality of matching between training firms and apprentices has become poorer.
The share of prematurely terminated apprenticeship contracts has significantly increased, especially in higher education. It is estimated that around 70% of this surge in apprenticeship exit rates at the higher education level can be attributed to the 2018 reform. There are also possible windfall effects: It is likely that part of the subsidised apprenticeships have been used as a substitution for hiring regular employees.
According to the study, funding should be more focused on training programmes with stronger firm–apprentice matching and the link between university and labour market should be improved by specific measures.
Data foundation
The study is based on an analysis of French administrative and educational data. To analyse trends in employment and wages, data on graduates from the 2020/21 cohort are analysed, and individuals with an apprenticeship contract are compared with individuals without such contract. Administrative data on apprenticeship contracts and early contract terminations between 2012 and 2022 are also included.
Using econometric estimates, the study also analyses how the 2018 reform has affected apprenticeship exit rates in the higher education sector.
Training at higher education institutions in France
France’s apprenticeship system at the higher education level combines firm-based training with academic instruction. Students are employed by a company and receive practical training there, and they also attend lectures and are able to obtain a higher education qualification, up to and including a master’s degree. The model thus has similarities with the German dual study programme. However, unlike in Germany, where firm-based training and higher education are generally separate tracks, with the dual study programme representing a special form of study, firm-based training in France is fully integrated into the higher education system. In 2023/24, more than 635,000 trainees completed their training in the higher education sector.
