Apprenticeship programmes are in many countries important stepping stones into the labour market. However, recruitment of apprentices seems to follow the business cycle. This pattern may be caused by firms' contemporaneous demand for labour, but may also be consistent with an investment hypothesis. A model, in which the tightness in the labour market is taken into account, is tested on a sample of Norwegian quarterly firm-specific data. The empirical findings give moderate support to an investment hypothesis. The apprentices substitute to some degree for skilled labour but are recruited primarily based on the labour market situation. The wage level plays a minor role for recruitment of apprentices. © Scottish Economic Society 2005, Published by Blackwell Publishing.
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