The Impact of Subsidies on Training
Evidence from the United States
Employer-provided training facilitates labour market integration, rapidly adapts to evolving labour market trends and imparts work-relevant skills. The United States Department of Labor facilitates training through Registered Apprenticeship. The United States Department of Labor distributes subsidies to incentivise employer participation, in amounts exceeding one billion USD since 2015. The first such subsidy was the American Apprenticeship Initiative (AAI). The AAI’s goal was to increase the number of Registered Apprenticeship contracts in eligible states in the advanced manufacturing, information, and healthcare industries. I investigate the AAI’s causal effect on the number of Registered Apprenticeship contracts using United States Department of Labor administrative data. I exploit state, time, and industry variation in AAI treatment eligibility to conduct difference-in-difference and triple-difference methodologies. To reinforce internal validity, I leverage spatial variation to perform spatial regression discontinuity and spatial difference-in-discontinuity estimations. Results indicate that the AAI has not caused growth in the number of Registered Apprenticeship contracts. I find no statistically significant heterogeneity in the effect of subsidies on Registered Apprenticeship contracts between states with high and low credit constraint index averages. Similarly, the prevalence of small firms does not drive treatment effect heterogeneity.