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Should Firms Be Required to Pay for Vocational Training?

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  • Stevens, Margaret

Abstract

Failure in the training market may result from credit constraints and other capital market imperfections, deterring potential trainees, or labour market imperfections creating external benefits for firms. This paper presents a model of a training market affected by both problems, and examines their impact, and the impact of various policy measures, on the welfare of workers and firms. It is shown that there is a rationale for imposing training costs on firms, irrespective of the cause of under-investment. However, training levy schemes in which the levy depends upon the wage bill are shown to address capital market imperfections only.

Suggested Citation

  • Stevens, Margaret, 2001. "Should Firms Be Required to Pay for Vocational Training?," Economic Journal, Royal Economic Society, vol. 111(473), pages 485-505, July.
    • Handle: RePEc:ecj:econjl:v:111:y:2001:i:473:p:485-505
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    References listed on IDEAS

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    1. Jones, Ian, 1988. "An Evaluation of YTS," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 4(3), pages 54-71, Autumn.
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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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