## The Value of Vocation

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**Canonical URL:** [The Value of Vocation](https://www.imf.org/-/media/files/publications/fandd/article/2025/03/petrakis.pdf)

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### Economic benefits and rationale
- Vocational training can provide “a credible skills signal” to employers and prepare people for jobs in a particular occupation or sector.
- Vocational training is often more accessible than university education due to lower costs and shorter time commitments.
- Vocational pathways can lead to entrepreneurship and high earnings without a university degree, as illustrated by multiple high-profile examples cited in the text.
- Vocational training is particularly relevant for developing economies where university degrees are often out of reach or do not match employer needs.

### Evidence from randomized evaluations and studies
- A study in Uganda found that income gains for people offered free six-month vocational training were both larger and more sustained over time than for people offered a wage subsidy of $50 a month for six-month on-the-job apprenticeships.
- In a follow-up study after the COVID pandemic, Ugandan vocational trainees were more likely to lose their jobs at the beginning of the pandemic but recovered and ultimately earned more over the course of the pandemic than peers not offered the training.
- J-PAL reviewed 28 studies on vocational and skills training programs across countries including Argentina, Bangladesh, Türkiye, and the US and found mixed success; program design matters for impact.
- Sectoral employment programs in the US have produced substantial and persistent earnings increases: Project QUEST raised average annual earnings of participants by 26 percent six years later and 15 percent eleven years later compared with nonparticipants.

### Program design features associated with success
- Effective programs commonly include:
  - industry-recognized certification;
  - integration of soft skills training;
  - strong connections to employers;
  - practical work experience leading to certification or diploma.
- Programs targeted toward in-demand sectors are more likely to bridge the gap between worker skills and employer needs.

### Demand-side and demographic pressures
- An August 2023 report by the World Bank, the International Labour Organization, and UNESCO found that technical and vocational education and training in low- and middle-income countries do not match the skills needed in the labor market and these countries are unprepared for a large rise in future demand for these skills.
- In Burundi, Mali, and Uganda, the number of secondary technical and vocational education students is expected to more than quadruple over the next two decades; in Niger, the number is expected to rise tenfold.
- Many low- and middle-income countries face increasing pressure from high shares of youth not in education, employment, or training.

### Costs, financing, and private-sector interest
- J-PAL’s research shows program costs can vary widely, from a few hundred dollars to more than $10,000 per person trained.
- Low- and middle-income countries spend less than 0.2 percent of GDP on vocational training—less than half what high-income countries spend.
- The World Bank–ILO–UNESCO report suggests these programs will need to tap private financing.
- Economic growth in Africa and Asia is making those regions more attractive for training providers and investors; Pitman Training is expanding partnerships in Nigeria, Zimbabwe, Kenya, and Ghana and offering courses from secretarial skills to software and web development.

### Political economy and public responses to higher education costs
- Public concern about university costs is evident: just 22 percent of Americans said that college is worth the money according to a Pew Research Center study.
- Policy actions referenced:
  - US President Joe Biden provided almost $180 billion in student debt relief, helping 4.9 million borrowers.
  - Australian Prime Minister Anthony Albanese announced a $A 16 billion (about US$10 billion) debt cut for 3 million Australian students and capped indexation on education loans after high inflation saddled university graduates with a 7.1 percent payment increase.

### Policy implications and recommendations
- Design vocational training carefully to include features that show the most promise in the given context and target programs toward in-demand sectors.
- Integrate industry-recognized certification, soft skills, practical experience, and employer connections to increase effectiveness.
- Consider leveraging private financing and partnerships with the private sector and civil society to scale programs, especially in low- and middle-income countries with limited public spending on vocational training.
- Monitor and evaluate programs using rigorous methods (for example, randomized controlled trials) to identify which designs yield sustained earnings and employment gains.

*Maria Petrakis, "The Value of Vocation," F&D, March 2025.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2025/03/petrakis.pdf_