The Power of Self-Interest: Effects of Education and Training Entitlements in Later-Life

Melbourne Institute Working Paper No. 12/17

Date: 2017

Author(s):

Cain Polidano
Justin van de Ven
Sarah Voitchovsky

Abstract

Education and training among the working-age population has become an increasingly important policy issue as working lives have lengthened and the pace of technological change has quickened. This paper describes the effects of a reform that replaced a supply-driven model, in which government selected the number and providers of publicly subsidised Vocational Education and Training (VET), with a demand-driven approach that broadened access to adult training and gave working-age individuals greater freedom of VET course choice. Difference-in-differences analysis reveals that the large-scale reform, which was introduced in the Australian state of Victoria from 2009, substantively increased participation in VET among the population aged 25-54, and corresponded with an improved match between VET courses taken and objective ex ante measures of labour market demand. Indeed, the scheme was so popular that it resulted in a budget over-run by 2012 of $400 million (AUD, on a total budget of $1.3 billion).

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  • Adult education, voucher, entitlement, Vocational Education and Training (VET), demand-driven subsidy