Returns to formal and informal vocational education and training in India
International Journal of Manpower
ISSN: 0143-7720
Article publication date: 10 December 2021
Issue publication date: 13 December 2022
Abstract
Purpose
In the process of school-to-work transition, the role of general education and vocational education and training (VET) remains quite central. Based on the human capital theory, we estimate whether investment in VET brings additional returns for workers across the age cohorts.
Design/methodology/approach
The focus of our study being the labour market in India, the data from the Periodic Labour Force Survey 2018–19, conducted by the National Statistical Office, has been used for analysis. We have applied the ordinary least square method with sample selection correction, the quasi-experimental technique of propensity score matching and heteroskedasticity based instrumental variable approach to estimate the returns with respect to no VET, formal VET and informal VET.
Findings
Our study shows that workers with formal VET earn higher wages than workers with no VET or informal VET. The study finds that workers with informal VET do not earn higher wages than workers with no VET. Moreover, from the age cohort analysis, we have deduced that wage advantage of workers with formal VET persists across all age cohorts and, in fact, accentuates with an increase in age.
Originality/value
We have estimated that VET being complemented with basic general education fetches higher returns in the labour market, especially when provided through formal channels. Moreover, to the best of our knowledge, in the case of developing countries where informal VET is widely provided, this is one of the first studies that captures the return to informal VET. Lastly, complementing the existing studies on the developed countries, we have estimated the returns to VET over the life cycle of the workers.
Keywords
Acknowledgements
The authors are thankful to the editor, Francesco Pastore, and three anonymous reviewers of this journal for their constructive and helpful comments and suggestions to improve this article. Ajay Sharma is thankful to IIM Indore for providing the research support under Young Faculty Research Chair.
Citation
Bahl, S., Bhatt, V. and Sharma, A. (2022), "Returns to formal and informal vocational education and training in India", International Journal of Manpower, Vol. 43 No. 7, pp. 1620-1645. https://doi.org/10.1108/IJM-04-2021-0211
Publisher
:Emerald Publishing Limited
Copyright © 2021, Emerald Publishing Limited