Adrian Ziderman

INVESTMENT IN GENERAL TRAINING: THE ROLE OF INFORMATION AND LABOUR MOBILITY*

Following the seminal work of Becker (I964), it is widely accepted in the literature that firms will be unwilling to finance training which workers may use in other firms. This paper takes issue with this prediction and suggests that firms will frequently share in the cost of such general training.1 Becker argues that a firm which pays for the training of workers in skills of potential use to other firms will lose these workers: since other firms bear none of the costs of general training, they can attract a worker with such training by outbidding the firm which trained him. Recognising this absence of property rights over an investment in general training, firms will refuse to provide it. Hence, if general training is to take place, the trainee will have to pay for it. If potential trainees are unwilling or unable to pay, general training will not take place. A shortage in general training is likely to emerge; this may be especially pronounced in developing countries.2 In contrast, the outlook for

Vocational Schooling, Occupational Matching, and Labor Market Earnings in Israel

The authors conducted a comparative analysis of the earnings of workers in Israel who had last attended vocational schools and those who had last attended academic secondary schools before entering the labor force. Their findings suggest that Israel may provide an example of an educational system in which vocational schooling is economically effective. Vocational schooling in Israel has proven more cost-effective than general academic training. In particular, vocational school attenders who later worked in occupations related to their course of study earned more. Their wages were up to 10 percent more a month than their peers who studied at academic secondary schools and those who attended vocational schools but found employment in other occupations not related to their field of study. These results reinforce similar findings in recent research on vocational schooling in the United States. A caveat is necessary to temper the generally positive findings concerning vocational schooling in Israel. While vocational schooling is cost-effective compared with other forms of secondary schooling, it does not compare favorably with other forms of training for skilled trades, such as apprenticeships and factory-based vocational schools. Another factor is the national consensus in Israel favoring education designed to equip young people for the social and cultural role of integrating the countrys heterogenous, largely immigrant population.

Vocational Education in Israel: Wage Effects of the VocEd-Occupation Match

In an earlier paper based on Israeli census data, the authors showed that vocational school completers achieved higher earnings than their counter-parts who attended academic secondary schools, but only if they worked in occupations related to the vocational course of study pursued. These findings were challenged by Lawrence Hotchkiss; using U.S. follow-up data from the High School and Beyond survey, he argued that the wage advantage of vocational school completers working in related occupations stemmed from employment in a well-paid occupation (a possibility not examined in our earlier estimating model) and was not the result of the training received. In this paper, we replicate the U.S. study using our Israeli data base; the results strongly confirm those from our earlier study. How may the contrasting results for Israel and the United States be explained? We suggest that the U.S. study may be faulted; its focus on young workers in their first job after graduation, may have led to unduly pessimistic results with regard to the labor market outcomes of vocational schooling.

Financing vocational training in Sub-Saharan Africa

This study describes the emerging consensus about training finance largely on the basis of experiences in Latin America and Asia. The paper tests this consensus against findings from Sub-Saharan Africa. It then sets out the theoretical basis for different financing mechanisms, including the rationale for state intervention in training markets. The study explores the effects of various types of training levies, different forms of training funds, and the implications of various transfer mechanisms. It also examines the difficult area of financing informal sector training. The study brings together and synthesizes hitherto inaccessible material on training finance, which was scattered in project documents and unpublished case studies. It includes detailed field investigations of new experiences in South Africa and Tanzania and throws new light on established practice in Zimbabwe and Kenya. The study also emphasizes the wider role of sound funding mechanisms (beyond finance) in leading to effective, demand-oriented training systems. Finally, the study emphasizes policy applications, with detailed discussions of strengths and weaknesses of alternative policies and measures.

On education, screening and human capital

Abstract The paper tests the hypothesis that educational attainment acts, inter alia, as a screening device for worker selection by comparing the average educational level of pairs of screened and non-screened groups within similar occupational categories. The results, based on Israeli data, support the view that strong screening effects are at work.

A New Model for Equitable and Efficient Resource Allocation to Schools: The Israeli Case

This paper sets out a new budget allocation formula for schools, designed to achieve a more equitable distribution of educational achievement. In addition to needs-based elements, the suggested composite allocation formula includes an improvement component, whereby schools receive budgetary allocations based on a new incentive measure developed in this paper: Improvement in the Educational Achievement Distribution. The development of the budget allocation formula is demonstrated utilizing Israeli data. Large-scale, nationwide datasets relating students’ academic achievement to student background variables, teacher profiles, and school characteristics were analyzed to identify appropriate needs-based formula components and to estimate their weights. The results are compared with the funding formulas currently used in Israel.

National Programmes in Technical and Vocational Education: economic and education relationships1

Abstract The article considers the nexus between the economy and between secondary technical and vocational education as evidenced in contrasting policies and outcomes across countries. In particular the article discusses trends in the relative importance of secondary technical and vocational education in national education and training programmes, with emphasis on developing countries; it considers conflicts stemming from the dual linkages of technical and vocational education to the education system as a whole and to labour markets; it examines critically the extensive literature on the economic efficacy of vocational education; it considers the new challenges facing vocational education systems from economic, technological and structural change; it concludes with a discussion of measures that are increasingly being advocated to improve the link between vocational education systems and between labour market needs and employment opportunities.

Student loans and their alternatives: improving the performance of deferred payment programs

The opportunities for increasing student contributions to the costs of higher education are many. Student loans have received much attention both in literature and in practice. While they have not always worked well, we have argued that suitably reformed, they can constitute a productive, though limited, mechanism for cost recovery. In certain countries, however, other mechanisms may be more appropriate. Indeed, the policy maker is presented with a wide menu of policy choices, though some creativity may be required in their application to particular local settings. Currently, loan programs exist in over 50 developing and industrial countries, and have been introduced most commonly to assist students to pay their living expenses.In order to improve financial effectiveness, programs should be targeted toward the most needy and able students. Hidden subsidies should be limited by charging positive real interest rates, combined with repayment plans that take account of the likely pattern of graduate earnings. Default reductions require that loan programs be managed by institutions with the capacity and financial incentives to collect - namely banks, private collection agencies, or taxation departments. Such reforms offer great potential to transform small programs into relatively efficient forms of student support.Larger programs, however, may be more difficult to manage. Some countries have considered alternatives which preserve the basic concept of paying for education from future income. The most notable is a graduate tax in which a student pays a fixed percentage of income over the entire working life, regardless of how much is repaid. Another option is national service which require students to perform socially productive work in exchange for part or all of education costs. In the presence of an effective tax system, a graduate tax could bring in significantly more revenue than traditional loan programs. Besides improved financial efficiency, income contingent payments may be more equitable since they limit the risk to poorer students. In countries with weak taxation systems, this option may not be feasible.

Financing Training in Developing Countries: The Role of Payroll Taxes.

Abstract In most developing countries, the major programs of vocational training and manpower-skill development are financed from general government revenues. Increasingly, however, earmarked payroll taxes are employed to finance training. This paper summarizes international experience with these payroll taxes, drawing the distinction between the more traditional revenue raising schemes on the lines of the Latin American model and the newer levy-grant schemes. Drawing upon experience of payroll taxes in advanced economies it discusses the incidence of these taxes in developing countries and presents an economic rationale for their growing use, as part of a reverse social security scheme. It concludes that the desirability of using payroll taxes to finance training, compared to other alternatives available to developing country governments, is likely to be contingent upon the stage of a countrys development.

Can Vocational Education Improve the Wages of Minorities and Disadvantaged Groups? The Case of Israel

There is a considerable empirical literature which compares wage levels of workers who have studied at secondary vocational schools with wages of workers who took academic schooling. In general, vocational education does not lead to higher wages. However, in some countries where labor markets are characterized by employment growth, skill shortages and a good match between vocational skills and available jobs, the record of vocational schooling has been more positive. Israel constitutes a case in point. However, little attention has been given to examining the success of vocational education in raising the wages of various sub-sections of the labor force, in particular of minorities and disadvantaged groups. In this paper, we examine the efficacy of vocational education in raising the wage levels of four such groups: recent immigrants, Jews of Eastern origin, Israeli Arabs and females. The results are mixed, differing from group to group, thus justifying our approach of examining the impact of vocational schooling on finer breakdowns of the population of secondary school completers.