Does an Employer Training Levy Work?- The Incidence of and Returns to Adult Vocational Training in France and Britain
Vocational training of adult workers is vital for both upgrading the average level of skills and keeping workers abreast of technological change. We examine here the outcomes of two systems operating under very different policy regimes towards continuing vocational training for the adult workforce. Training policy in France has been interventionist, using an employer training levy since the early 1970s, whereas British policy has relied largely on individual initiatives for training investment by employers and workers; to date there have been few attempts to compare the outcomes of these contrasting policies.
The paper begins with a short review of the theory of vocational training, indicating why market failure and under-provision are the likely outcome of relying on markets, and signalling the types of corrective policy which might be adopted. We then set up several hypotheses about the likely impact of policy in France relative to Britain to provide a framework for evaluation. We conduct a survey of the outcomes of the two systems in terms of observed training incidence and the returns to training captured by workers and by employers. For this empirical comparison we draw on a wide range of econometric studies; however not all of our hypotheses can be tested as some topics have not been analysed due to a lack of suitable data. We conclude with an attempt to assess whether interventionist French policies have overcome training market failures and improved the incentives to train by eliminating externalities, credit or information constraints.