Chair of Economic Policy and SME Research

Economic Costs and Benefits of the system of Chamber of Crafts

Subject matter
Economic Costs and Benefits of the system of Chamber of Crafts

Client
Deutscher Handwerkskammertag (German Confederation of Skilled Crafts)

Duration
01.01.2007 - 30.09.2009

Brief Description
The goal of this project is to relate the approach of cost-benefit ratio on the system of the Chamber of Crafts and to organize the arguments that are presented either as costs or as benefits in the economic view. In order to achieve this, the functions of the Chamber of Crafts must be understood, and it must be asked at what costs and to what benefits te system fulfills these functions.

If one summarizes the results won from this and considers that with this an estimation of some, but not all, areas of performance can be evaluated, we can see that the Chambers of Craft have a net benefit of 502 million euros in a very careful calculation. In a less careful calculation, the net benefit rises to 966 euros.

This difference is grounded primarily in vocational education, where an interest rate of 2,5 percent which will be deducted from the future returns to education of the journeymen and master craftsmen. As the social discount rate cannot be clearly defined, the only option here is to show the extent of the difference in a variety of situations. As has been shown, the net benefit reacts strongly to the interest rate, as the education returns are to be discounted over the course of a relatively long period of time.

On the whole, it is shown that in all viewed areas of function, the benefit of the system outweighs the costs, in some ways substantially. This is particularly true for the craft education system, which can be viewed as a central building block of the Chamber of Craft system. It also becomes clear, however, that the Chamber of Craft system goes hand in hand with a net benefit in all economic areas.

Every form of massive change to this system must finally be analyzed on the level of economic cost and benefit in order to not jeopardize the previous functions and net economic benefits. Only through an empirical analysis of the net benefits can provide this discussion with objectivity. For this form of institution-oriented cost-benefit analysis, this project offers an example that is capable of more precisely quantifying the economic meaning of the Champer of Craft system.

Co-operation partners
Economic Institute for Crafts and Small and Medium Enterprises of the University of Göttingen

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