Journal Article

Human capital theory and UK vocational training policy

M Stevens

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 15, issue 1, pages 16-32
Published in print March 1999 | ISSN: 0266-903X
Published online March 1999 | e-ISSN: 1460-2121 | DOI: http://dx.doi.org/10.1093/oxrep/15.1.16
Human capital theory and UK vocational training policy

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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.

Journal Article.  0 words. 

Subjects: Economic Development and Growth ; Public Economics ; Political Economy ; Public Policy

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