Inequality in the 21st Century

The London School of Economics & Political Science

London, UK

July 02 - 04, 2015

As the global economic crisis shatters the foundations of market economies, threatens regular employment and increases youth unemployment, governments around the world increasingly turn towards the Vocational Education and Training (VET) system as a possible remedy to stabilize labour markets. The VET system integrates formal education in vocational schools with on-the-job training in firms, and constitutes an important public-private institutional foundation in market economies such as Germany, Switzerland, or the Netherlands. Yet, while the system's benefits in alleviating, for example youth unemployment, are certainly justified, the remaining advantages of the VET system so far remain not well understood.

Recent research indicates that the VET system represents a source of important technical and non-technical knowledge for firms. As such, it has been shown to constitute an important ingredient in a firm's workforce, to improve a firm's ability to absorb technologies and knowledge, and to foster the overall innovativeness of firms. These findings suggest that the VET system provides substantive positive effects on important firm-level performance indicators. In this symposium we combine four presentations that will elicit the mechanisms and functions of the VET system in fostering important firm level outcomes such as the transfer of knowledge and innovation.

Against this background, the purpose of the proposed session is to bundle four paper presentations that as a whole provide a deep understanding of the role of the VET system for economic areas and for firms within these in facilitating innovation and the transfer of knowledge. The first paper of the session analyses costs and benefits of vocational education for firms. It identifies monopsony power of firms as an important determinant of apprentice pay and thus of training costs. By explaining why firms offer vocational education it lays the foundation of the following papers. The second paper examines learning during vocational education from a firm’s perspective. Although VET is heavily regulated by training curricula, firms have some discretion in the way how they train (e.g. training workshops, external instructors, further education during VET, production oriented training, etc.) and how the combine them. The paper classifies how firms collect, process and transfer knowledge, empirically identifies the organization of training and analyses its specific costs. The third paper investigates the impact of a technological shock on wages and employment perspectives of workers in the manufacturing sector. More specifically it examines how the introduction of CNC machines in training curricula of machining metal operators effects the labor market outcomes of those works who completed their apprenticeship before the change in the curriculum. The fourth paper examine how the presence of apprentices in a firm's workforce facilitates the simultaneous introduction of radical, incremental, and organizational innovations.