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Human Capital Theory and UK Vocational Training Policy


  • Stevens, Margaret


Since the Industrial Training Act of 1964, the UK government has adopted a variety of policies intended to redress a problem of under-investment in vocational training. In the 1960s and 1970s it attempted to regulate the training provided by firms, through a levy scheme. More recently, subsidised training schemes have been the centrepiece of policy. This paper examines the explanations for market failure in vocational training, and explores the rationale for such policies. Under-investment can arise from credit constraints and uncertainty facing trainees, and from imperfect competition in the labour market which creates external benefits for firms. Both subsidies and regulation can be effective in dealing with these problems, although it is argued that the training levy scheme, as implemented in the UK and other countries, should be viewed mainly as a mechanism for releasing credit constraints. Copyright 1999 by Oxford University Press.

Suggested Citation

  • Stevens, Margaret, 1999. "Human Capital Theory and UK Vocational Training Policy," Oxford Review of Economic Policy, Oxford University Press, vol. 15(1), pages 16-32, Spring.
  • Handle: RePEc:oup:oxford:v:15:y:1999:i:1:p:16-32

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    References listed on IDEAS

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    Cited by:

    1. Duncan McVicar & Cain Polidano, 2015. "If You Get What You Want, Do You Get What You Need? Course Choice and Achievement Effects of a Vocational Education and Training Voucher Scheme," Melbourne Institute Working Paper Series wp2015n06, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    2. Samuel Muehlemann & Paul Ryan & Stefan C. Wolter, 2013. "Monopsony Power, Pay Structure, and Training," ILR Review, Cornell University, ILR School, vol. 66(5), pages 1097-1114, October.
    3. William Collier & Francis Green & Young-Bae Kim & John Peirson, 2011. "Education, Training and Economic Performance: Evidence from Establishment Survival Data," Journal of Labor Research, Springer, vol. 32(4), pages 336-361, December.
    4. Ryan, Paul & Wagner, Karin & Teuber, Silvia & Backes-Gellner, Uschi, 2011. "Financial aspects of apprenticeship training in Germany, Great Britain an Switzerland / Finanzielle Aspekte der betrieblichen Ausbildung in Deutschland, Großbritannien und der Schweiz," Arbeitspapiere 241, Hans-Böckler-Stiftung, Düsseldorf.
    5. Paul Ryan & Uschi Backes-Gellner & Silvia Teuber & Karin Wagner, 2012. "Apprentice pay in Britain, Germany and Switzerland: institutions, market forces, market power," Economics of Education Working Paper Series 0075, University of Zurich, Department of Business Administration (IBW).
    6. Bornemann, Stefan, 2005. "Spillovers in Vocational Training," Discussion Papers in Economics 693, University of Munich, Department of Economics.
    7. Konstantinos Angelopoulos & Andrea Benecchi & Jim Malley, 2017. "Can Subsidising Job-Related Training Reduce Inequality?," CESifo Working Paper Series 6605, CESifo Group Munich.
    8. Yanick Labrie & Claude Montmarquette, 2005. "La formation qualifiante et transférable en milieu de travail," CIRANO Project Reports 2005rp-04, CIRANO.
    9. Inge Sieben, 2007. "Does training trigger turnover - or not?," Work, Employment & Society, British Sociological Association, vol. 21(3), pages 397-416, September.
    10. Guidetti, Giovanni & Mazzanti, Massimiliano, 2007. "Firm-level training in local economic systems: Complementarities in production and firm innovation strategies," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(6), pages 875-894, December.
    11. Konstantinos Angelopoulos & Andrea Benecchi & James Malley, 2017. "Can subsidising job-related training reduce inequality?," Working Papers 2017_10, Business School - Economics, University of Glasgow.
    12. Holger Görg & Eric Strobl, 2006. "Do Government Subsidies Stimulate Training Expenditure? Microeconometric Evidence from Plant-Level Data," Southern Economic Journal, Southern Economic Association, vol. 72(4), pages 860-876, April.
    13. Berthold Norbert & Stettes Oliver, 2001. "Die betriebliche Mitbestimmung in Deutschland – eine richtige Reform in die falsche Richtung," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 52(1), pages 15-36, January.
    14. Andrew Sharpe & James Gibson, 2005. "The Apprenticeship System in Canada: Trends and Issues," CSLS Research Reports 2005-04, Centre for the Study of Living Standards.
    15. Giuseppe Croce, 2005. "A model of training policies in an imperfectly competitive labour market," Working Papers 90, University of Rome La Sapienza, Department of Public Economics.
    16. Cusin, Giuseppe, 2007. "General training and oligopsony," Research in Economics, Elsevier, vol. 61(3), pages 113-121, September.
    17. Giorgio Brunello & Maria De Paola, 2004. "Market Failures and the Under-Provision of Training," CESifo Working Paper Series 1286, CESifo Group Munich.

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