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The possibility of adverse selection by training firms is common theoretical argument for company-sponsored investments in general skills. The paper derives a public and a private signal after apprenticeship training and shows that training firms are able to positively select graduates they keep. The public signal has a stronger impact on entry wages of employer changers than for stayers and private signals shows exactly the opposite pattern.

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This paper studies the factors that influence the beginning of either a new vocational training in another occupation (stopout) or the stopping of vocational training altogether after an early termination (dropout of the vocational system). One influencing factor is the amount of the human capital acquired which is determined by the duration of (early terminated) vocational training. To analyse this for the German case, the author uses data (Ausbildungspanel Saarland) which contains detailed information about apprenticeship careers and their labour market outcomes for all apprentices between 1999 and 2002 in Saarland (a German federal state). Of the premature terminations analysed here 72 per cent are stopouts. The estimations of robust logit-models show that early premature terminations and an above-average apprenticeship wage in the training occupation are more likely to lead to an apprenticeship stopout. Stopouts who terminate their contracts early on in the apprenticeship process are more likely to change their occupation.

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