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Abstract
Skill development has been a major policy agenda in several countries and there is a lot of emphasis on the promotion of vocational education and training (VET) programmes. This paper investigates the labour market outcomes of the vocationally trained population in India using the data from a nationally representative survey on employment and unemployment. We find that a large section of the population in the age group 15–59 years does not have any kind of formal training. Among the VET holders, a large share is accounted for by non-formal trainees. Quite a high proportion of formal trainees in the workforce remain unemployed reflecting underutilisation of human resource. We also examine the extent to which individuals’ training matches their occupational levels and find that overall about two-thirds of the trainees are employed in occupations related to the field of training. Further, we compare the returns to general secondary and vocational education streams using the standard earnings function accounting for the sample selection bias. Our findings show that the relative returns to vocational education is higher than that to general secondary education.
Acknowledgements
The authors are grateful to two anonymous referees of this journal for their useful comments. Institutional support provided by the Indian Institute of Management Udaipur, Udaipur and Indian Institute of Technology Delhi, New Delhi is gratefully acknowledged. The usual disclaimer applies.
Notes
1. In India, in consistent with the definition recommended by the ILO, the terms informal sector and unorganised sector are used interchangeably (NCEUS Citation2008). The unorganised sector ‘consists of all unincorporated private enterprises owned by individuals or households engaged in the sale and production of goods and services operated on a proprietary or partnership basis and with less than ten total workers’ (NCEUS Citation2008, 2, 3). More than 90% workforce of the country is engaged in the unorganised sector.
2. This section draws on the 66th round of survey, unlike the case with the rest of the paper which relies on the 68th round. No question on perceptions about VET was enquired in the 68th round.
3. Earlier, India set a target of skilling 500 million people by 2022. King (Citation2012) raises several related questions on the ambitious target of skilling 500 million people and terms this as ‘the numbers game’. Mehrotra (Citation2014) argues that this ‘gross overestimate’ is partly because of a lack of definition of skills.
4. ITIs, ITCs and polytechnics are the main institutes providing vocational training in India.
5. The Eleventh Five Year Plan, also considered as the ‘Education Plan’, placed highest priority on skilling workforce in the country.
6. A structured training programme has: (i) a definite title with prescribed syllabus and curriculum and a specified duration of the training, and (ii) some entry level eligibility in terms of education and age.
7. As we discuss in the subsequent sections, most of the individuals with non-formal training are either self-employed or are employed in sectors such as agriculture for whom wages are not available.
8. In China, students can enrol in a vocational stream after completing compulsory nine years of academic education.
9. For instance, many auto companies hire temporary workers when demand picks up and release them when sales slump, thus saving labour costs.
10. This segment of workers lacks social security benefits. They generally get low wages and also suffer exploitation in the hands of contractors.
11. The survey provides information on the sector of employment for each employed individual according to the National Industrial Classification-2008 (NIC-08) at a disaggregated level. These industries can be clubbed into the three sectors to facilitate an examination of the outcomes at a broader level.
12. At the three-digit level, we have a total of 110 occupations. The occupational classification is based upon the National Classification of Occupations 2004 (NCO-04) coding structure.
13. While matching, we exclude the ‘other’ training field since it’s a heterogenous category.
14. Neuman and Ziderman (Citation1991) find that 47% of VET attenders in Israel were employed in occupations related to their course of study.
15. In a study based on a survey administered on the students of standard 10 and 12, Aggarwal, Kapur, and Tognatta (Citation2012) report that ‘Computer and English speaking skills’ are the most valued skills for students. Indeed, communication in English has been one of the most demanded skills by Indian employers (Blom and Saeki Citation2011). It has been shown that the returns to English speaking individuals in India are high than those who do not speak English (Azam, Chin, and Prakash Citation2013).
16. The significance of the selection term indicates that the OLS estimates may be biased and inconsistent. The OLS estimates have been reported, however, to allow for a comparison.
17. For Heckman model, estimates of only the wage equation (second stage) are reported. Exclusion restrictions included in the Heckman model (in the first stage) are household size, number of children in a household and household type. Except the number of children in a household, the other two exclusion restrictions are statistically significant at the 1% level of significance in all three samples.
18. Since the dependent variable is in the logarithmic form, the coefficient of a dummy variable is transformed using the expression, (ecoefficient −1).
19. Some studies (for instance, Neuman and Ziderman (Citation1991, Citation1999) for Israel, and Arriagada and Ziderman (Citation1992) for Brazil) have shown vocational schooling to be more cost effective than general academic education.
20. The survey was administered to 2855 students who were studying in Class 12 (both government and private schools) in three Indian states Chhattisgarh, Karnataka and Rajasthan.
21. Students were allowed to check more than one response for this question.
22. A survey in the state of West Bengal finds that about 38% student respondents and 49% parents feel that they are not informed about career options beyond secondary education (FICCI Citation2013).
23. A study by Blom and Saeki (Citation2011) finds that the Indian employers consider soft skills the most important skills.