Long-Term Educational Consequences of Vocational Training in Colombia

Abstract

We use administrative data and a randomization design to examine the long-term educational impacts of a large-scale vocational training program for disadvantaged youth in Colombia on trainees and their relatives. Up to eleven years after randomization, trainees were more likely to enroll in formal tertiary education, and their relatives more likely to complete secondary schooling. Various empirical tests suggest that, for females, vocational training helped relax credit constraints stemming from the direct costs of tertiary education. For males, the evidence suggests that additional tertiary education investments arise from the program improving fieldspecific knowledge and/or information about field-specific returns to tertiary education. Focusing only on labor-market outcomes and not accounting for these long-term tertiary education impacts on participants substantially understates the social desirability of the Colombian vocational training program. By contrast, including tertiary education impacts on participants increases the program's internal rate of return for women from 22.2% to 23.5% and for men from 10.2% to 20.5%.

Filling in the gaps: Expanding social protection in Colombia

“…To gauge the magnitude of the impact on formal employment, it is interesting to make a comparison to the 2012 reform that reduced non-wage labour costs by about 13 percentage points for workers with wages up to 10 minimum wages. The reform increased by 3.5 percentage points the probability of unemployed or informal workers below 10 minimum wages of moving into formality (Kugler, Kugler and Prada, 2017 [53]). Hence, the semi-elasticity of formal employment with respect to each point of reduction in non-labour costs would be 0.26.…”

“…The largest single elements of the tax wedge are pension contributions (12% for the employer), transport and severance allowances (11.7% and 8.3%, respectively) for the employer and pension and health benefits (8%) for the employee. Vast evidence shows that these high mandatory contributions for social security can explain high informality in Colombia (Camacho, Conover and Hoyos, 2013 [51]; Cuesta and Olivera, 2014 [52]; Kugler, Kugler and Prada, 2017 [53]; Kugler and Kugler, 2008[54]). The current high costs of formal labour also explain the large share of self-employment in Colombia, as firms usually evade social contributions when these are bundled with stringent labour regulations or high minimum wages (Levy, 2019[55]).…”

Can German vocational training combat skill shortages in developing countries? Evidence from dual training system in the Philippines

“…Black and Lynch (1996), Lynch and Black (1998), and Barrett and O'Connell (2001) used establishment or firm-level data to estimate the effect of training on productivity. There are recent studies on vocational training (e.g., Attanasio et al, 2011;Card et al, 2011;Hicks et al, 2013;Hirshleifer et al, 2015;Kugler et al, 2015), but OJT is not directly analyzed.…”

Hard and Soft Skills in Vocational Training: Experimental Evidence from Colombia

“…However, the extent to which vocational training programs succeed in improving the labor market outcomes of their participants is highly debatedand empirical evaluations of vocational programs report mixed results. While some programs suggest positive and sustained impacts (Kugler et al, 2022;Silliman and Virtanen, 2019;Brunner et al, 2019;Chakravarty et al, 2019;Attanasio et al, 2017;Diaz and Rosas, 2016;Reis, 2015;Attanasio, Kugler and Meghir, 2011), others report few or no effects (Alfonsi et al, 2020;Maitra and Mani, 2017;Hicks et al, 2013;Card et al, 2011;Galasso et al, 2004). 1 Moreover, even the positive effects of some vocational programs that succeed in improving labor market outcomes in the short term can dissipate in only a few years (Acevedo et al, 2020;Alzua et al, 2016;Hirshleifer et al, 2016).…”