Mismatch in vocational training programs

Stephen O’Connell, Lucas Mation, João Basto, Mark Dutz

Abstract

Vocational training programs are often ineffective in raising the employment and earnings of trainees. We assess the degree to which the mismatch between skills trained and skill demand can explain low effectiveness. Using a large-scale government skills training program for unemployed workers in Brazil, we show that a vocational training program that takes input from firms sizeably increases trainees’ probability of employment and earnings over the year following the course relative to an otherwise similar program run at the same time that did not take input from the private sector. Employer input helped align the supply of courses to future growth in skill demand. Trainees who completed courses aligned with faster-growing occupations exhibited larger employment effects. The differential effectiveness of the demand-driven program is explained largely by the change in the composition of courses offered. Filtering of requests by the administrating government office likely also further increased program effects. Our findings provide evidence that mismatch plays a substantial role in the effectiveness of vocational training programs, and that improved targeting may be achieved through limited, structured input from the private sector.