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Funding Mechanisms for Financing Vocational Training: An Analytical Framework

Author

Listed:
  • Ziderman, Adrian

    (Bar-Ilan University)

Abstract

The paper provides an account of innovative financing mechanisms which have been adopted in many national training systems. These mechanisms aim at correcting shortcomings of conventional training finance systems in order to better meet labor market needs, improve both the quality and relevance of training provision and to contain training costs. Directions of change include a greater diversification of funding sources for skills development (including cost sharing and training levies, mainly based on company payrolls), budgeting public training centres through objective funding formulas, encouraging more and higher quality enterprise training, the development of private training markets, increased competition between public and private training providers and the establishment of independent national training funds. Autonomous national training authorities, with broad powers and sizeable stakeholder representation, can be effective in both coordinating and steering national training systems.

Suggested Citation

  • Ziderman, Adrian, 2016. "Funding Mechanisms for Financing Vocational Training: An Analytical Framework," IZA Policy Papers 110, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izapps:pp110
    as

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    File URL: https://docs.iza.org/pp110.pdf
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    References listed on IDEAS

    as
    1. Gary S. Becker, 1975. "Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, Second Edition," NBER Books, National Bureau of Economic Research, Inc, number beck75-1.
    2. Whalley, John & Ziderman, Adrian, 1990. "Financing training in developing countries: The role of payroll taxes," Economics of Education Review, Elsevier, vol. 9(4), pages 377-387, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    demand-driven training; funding training institutions; individual learning accounts; Levy-Grant Schemes; national training authorities; payroll levies; private training provision; training finance; training funds; training subsidies; training taxes;
    All these keywords.

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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