The Moderating Effect of Firm‐Specificity on the Impact of Unemployment on the Demand for Apprentices: Evidence From Switzerland During <scp>COVID19</scp>

ABSTRACT This paper evaluates how firm‐specificity of apprenticeship training, equivalently firm‐specificity, moderates the response of the demand for apprentices to the unemployment rate. We first present a simplified conceptual framework to illustrate mechanisms through which this moderating effect could occur. We then empirically analyse the impact of unemployment on the demand for apprentices, and the abovementioned moderating effect. Using Poisson pseudo maximum likelihood methodology, we exploit monthly variation in the unemployment rate within sectors and cantons. We find that the unemployment rate is insignificantly associated with the demand for apprentices overall during the COVID19 period in Switzerland. We subsequently use a firm‐level survey conducted before COVID19 to construct three measures of firm‐specificity. Using each measure, firm‐specificity significantly moderates the effect of the unemployment rate on the demand for apprentices. A rise in the unemployment rate statistically and economically significantly reduces the demand for apprentices for firms imparting less firm‐specific training. On the other hand, a rise in the unemployment rate statistically and economically insignificantly affects the demand for apprentices within firms imparting more firm‐specific training. Our results are robust to the use of multiple measures of firm‐specificity and to the inclusion of controls capturing exposure to the pandemic and its economic support measures.