The Impact of Targeted Training Subsidies on the Incidence of Training: Evidence from the United States

Abstract

Enrolment in Registered Apprenticeships in the US has risen consistently since the global financial crisis. From 2015 onwards, publicly funded training subsidies were implemented to increase enrolment in Registered Apprenticeships. I evaluate the impact of the first such initiative, the American Apprenticeship Initiative (AAI), on the number of Registered Apprentices. The AAI started in 2015 and was financed by H1-B visa funds. It aimed to subsidise companies as an incentive for them to offer Registered Apprenticeship positions. This aimed at upskilling the American workforce in healthcare, information technology and advanced manufacturing industries and related occupations. I exploit geographical variation and variation in occupation-industry clusters in the eligibility for funding to identify the causal effect of AAI subsidies to training firms on the number of new Registered Apprenticeships. Considering the existing literature, I discuss the relative advantages that triple difference can have over difference-in-difference methodology in this setting. Findings from triple difference estimation, event studies and distributed lag models indicate that the AAI has not significantly affected the number of new Registered Apprenticeship positions. I additionally show that the triple difference estimates corresponding to the estimated effect of the AAI on the Number of Registered Apprenticeships is economically insignificant. Finally, I conduct spatial difference-in-discontinuity, extended difference-in-difference, and difference-in-difference with propensity score matching. All estimation methods yield results qualitatively aligned with baseline triple difference methodology and pass conventional diagnostic tests. I conclude by discussing policies that could help bolster Registered Apprenticeship in the United States.