This chapter points out that the apprenticeship system may function as an institution to overcome the poaching externality analysed in Chapter 2. The British apprenticeship system of the 1970s is used as an example. The form of training provided by an apprenticeship is typically general; thus in the absence of mobility restrictions, the benefits of training may accrue not only to the provider of training and to the trained worker, but also to other firms. The apprenticeship, with its ‘indenture’ period acts as an institutional device to assist firms providing the training to appropriate the benefits in the immediate post-training period.

The chapter analyses the effect of apprenticeships on employment duration, as exemplified by the available British evidence from the 1970s, from Sweep 4 of the National Child Development Study. The statistical analysis indicates that young men completing apprenticeships were less likely to leave employment in their first jobs than were individuals with no training. Some commentators have argued that accreditation of training is an important means of overcoming market failure where there is asymmetry of information about the value of firm-provided training (for example, where a firm providing training knows its worth, but other firms do not). The formal qualification associated with some apprenticeships is a means of conveying to non-training firms the value of firm-provided general training. The chapter shows that whether or not the apprenticeship was formally accredited had no significant influence on the effect of young male apprenticeships on employment duration. For British apprenticeships in the 1970s, accreditation appears not to have had a significant effect on early labour mobility.