Book chapter 2016

Government-Sponsored Vocational Education for Adults

Handbook of the Economics of Education
Journal · Vol. 5 · pp. 479-652
Abstract

This chapter considers the literature on government-sponsored vocational training for adults, with a particular substantive focus on training provided via active labor market programs and a particular geographic focus on Western Europe and North America. We begin with a discussion of the underlying economic theory of investment in human capital over the life cycle and of government intervention in that process, along with models of participation in government programs and in particular services within those program. Building on the theory as well as on institutional knowledge and well-known empirical regularities related to participation in training, we then lay out the common applied econometric approaches to estimating the impacts of government-sponsored training for adults and consider important design and measurement issues common to studies in the empirical literature. Six case studies that consider the institutions and evaluation literatures in the United States, the United Kingdom, Germany, France, Sweden, and Denmark come next. These countries all provide a rich base of compelling empirical evidence and also serve to illustrate a wide variety of institutional choices and applied econometric methodologies. The penultimate section considers what we know about matching potential trainees to training and to particular training types, an important topic in light of the strong evidence of heterogeneity in treatment effects provided by the case studies. The final section summarizes the literature and its limitations and offers suggestions for future research. © 2016 Elsevier B.V.

Keywords

Author Keywords

Vocational training education knowledge Incentives Active labor market programs activation Treatment Assignment

Index Keywords

Author Affiliations
University of Michigan, Ann Arbor, Ann Arbor, MI, United States, National Bureau of Economic Research, Cambridge, MA, United States, IZA - Institute of Labor Economics, Bonn, Nordrhein-Westfalen, Germany, CESifo GmbH, Munich, Bayern, Germany
University of Michigan, Ann Arbor, Ann Arbor, MI, United States
IZA - Institute of Labor Economics, Bonn, Nordrhein-Westfalen, Germany, CESifo GmbH, Munich, Bayern, Germany, Universität Basel, Basel, BS, Switzerland, Centre for Economic Policy Research, London, London, United Kingdom
Funding & Acknowledgements
Bundesministerium für Bildung und Forschung, BMBF
Funding text 1: In Germany, most publicly subsidized programs that provide basic education or further vocational training to adults are administered by the PES. The PES either pays for training directly, or it issues training vouchers which cover 50–100% of the direct cost of training. Moreover, the PES can pay income support to unemployed workers and wage subsidies for employed workers who participate in training. In addition to the programs administered by the PES, the Federal Ministry for Education and Research supports further vocational training of adults by covering parts of the direct cost of training and by providing income support during full-time education. Immigrants additionally have access to special programs funded by the Federal Office for Migration and Refugees.; Funding text 2: In 2012, the German government spent about 2.5 billion EUR or 0.1% of GDP on publicly subsidized adult education ( OECD, 2014 ). About 70% of expenditures are related to programs administered by the PES, about one forth is spent on programs supported by the Federal Ministry for Education and Research, and less than 5% go into programs for immigrants funded by the Federal Office for Migration and Refugees. Overall, there exist a variety of programs with different target populations and objectives. The programs can be grouped into four broad categories that are described in more detail in the following sections: basic education for adults, further vocational training, retraining, and training for career advancement.; Funding text 3: There are four different types of programs that provide basic education to adults. The first one comprises literacy programs. Participants in literacy programs can receive financial support through all three channels: via a training voucher from the PES or the Federal Ministry for Education and Research or, in case of immigrants, from the Federal Office for Migration and Refugees. Statistics only exist for the latter group. In 2012, about 10,000 immigrants participated in literacy programs, 60% of whom were women. 92 92; Funding text 4: The final group of programs consists of training for career advancement, which is funded by Federal Ministry for Education and Research. It is available to individuals who have already completed a formal vocational degree. The most common form of support is a so-called master grant. 106 106 Workers who want to obtain an advanced vocational degree in certain occupations have a legal claim to receive this grant. This includes advanced degrees as master craftsman (which has given the program its name), foreman, technician, or merchant, as well as advanced nonacademic degrees in health care, business administration, information technology or related occupations. An advanced vocational degree is a legal prerequisite for opening one's own business in these occupations. Hence, one additional objective of the program is to encourage workers in these occupations to start their own business. The government subsidizes 30.5% of the training costs and provides low-interest loans for the remaining part up to a total amount of 10,226 EUR. Moreover, the government covers the cost of living during full-time education subject to a means test. In 2012, 168,000 individuals received this grant, 41% of whom took part in full-time education. Women made up 32% of all beneficiaries. Their relatively low share can be explained by a large share of beneficiaries being trained in manual and technical occupations. Total expenditures amounted to 546 million EUR. 107 107; Funding text 5: There are also two much smaller programs which are targeted at particularly talented adults. They are administered by the Foundation for the Support of Vocational Training for Gifted Adults which is funded by the Federal Ministry for Education and Research. Adults qualify if they already have a recognized vocational degree and performed particularly well during their apprenticeship or in a supra-regional occupational competition. Conditional on eligibility, admission is a discretionary choice made by selection committees in the institutions that govern vocational education in the respective occupation, eg, the chamber of commerce. Under the first program, employed young adults under age 25 can receive a so-called further training grant. 108 108 It is a 3-year grant of no more than 2000 EUR per year to finance advanced vocational training courses that beneficiaries attend while working. This includes, for example, obtaining a specific certificate, language courses, personnel management courses, and preparatory courses for exams to obtain an advanced vocational degree. In 2012, there were 6500 new beneficiaries, about 50% of whom were female. 109 109; Funding text 6: The PES assigns workers to training either directly or by issuing a training voucher. The voucher specifies the training objective, an expiry date as well as possible restrictions in terms of the maximum duration of training or regional validity. Moreover, financial support is restricted to certified providers. Assignment to programs is a discretionary decision made by caseworkers. They assess whether a candidate has any skill deficits that are sufficiently severe to justify financial support and that could be removed with any of the available programs. After establishing eligibility and consulting the candidate, the final decision is based on the candidate's personal characteristics, including education, work experience, past employment record and career prospects. Additionally, caseworkers take into account labor market conditions, in particular demand for specific skills, the supply of courses offered by providers, and available funding.; Funding text 7: The following sections summarize the evidence on the impacts of publicly subsidized training for adults that was conducted in West Germany in 2000 or later. 115 115 For some programs, there are no evaluation studies available, mainly because they are of minor importance due to a relatively small share in total expenditures. This includes literacy programs and all programs supported by the Federal Ministry for Education and Research. The discussion is organized by target group rather than by program type. The reason for this is twofold. Firstly, this is the way the literature emerged in Germany. Secondly, the data available in Germany do not allow separating out all of the different types of programs described above. For example, it is not possible to distinguish retraining from other programs that provide a vocational degree. Moreover, many studies that analyze short measures for activation and vocational integration do not distinguish between vocational training measures and job search assistance or related programs.; Funding text 8: Education for adults in France is organized by institutions called GRETA (Groupement d’établissement), which operate on the regional level and represent local training providers. They offer courses or entire programs to both private and public clients. For example, the PES purchases entire courses directly from providers or assigns unemployed workers on an individual basis. There exist a large number of programs but only some of them are subsidized. 119 119 In 2011, the French government spent about 5.8 billion EUR or 0.3% of GDP on publicly subsidized education for adults. 120 120 About 65% of expenditures relate to programs offered via the PES to unemployed workers, while 35% refer to programs that are open to other target groups as well. In contrast to many other European countries, there is no special income support during participation in education for adults. Nonemployed workers receive their regular compensation (unemployment insurance, disability benefits or social assistance) or an equivalent compensation that runs under a different name during participation but follows the same rules as the regular benefits. Training for employed workers is financed by employers or education insurance funds which, in turn, are also funded by firms. In some cases there are financial benefits for firms in order to promote firm-provided training.; Funding text 9: The second type of programs comprises integration courses for foreigners. The French Bureau of Immigration and Integration assigns immigrants to French language courses, of which up to 400 h are supported by the state through tuition waivers. The courses also provide some knowledge about living in France. In 2011, 45,000 individuals participated with expenditures of 42 million EUR ( Office Français de l’ Immigration et de l’Intégration, 2012 ). Additionally, there exist so-called socio-linguistic workshops for immigrants who have lived in France already for some time but still lack appropriate language skills that facilitate integration. They also promote social integration, especially for women. The workshops are organized and financed by the Ministry of Immigration, Integration, National Identity and Solidarity Development. Finally, there are courses which provide migrant parents with information on the French school system, about the French society in general as well as children's and parents’ duties related to schooling. Moreover, parents attend French language courses at the children's educational facilities. Participation is free and there are no special requirements. In 2010, only about 5000 parents participated in the program ( Ministère de l’Intérieur, 2014 ).; Funding text 10: Further vocational training administered by other institutions than the PES is supported by the national grant program described earlier. Student aid is granted for participation in advanced vocational training or specialized further training courses mainly at community colleges 137 137 but also some other vocational training institutions. 138 138 The same eligibility criteria apply as for basic education: Adults must be at least 20 and no older than 55. Moreover, participants need to study at least half-time and for at least 3 weeks. Also the amount of student aid is the same. Participation is generally for free in Sweden but students must pay for textbooks and other study materials. In 2012, the Swedish government spent about 200 million EUR on student aid for further vocational training outside the PES. This corresponds to 42% of expenditures on student aid for adult education. 139 139
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