## The Value of Vocation

## Source details

**Canonical URL:** [The Value of Vocation](https://www.imf.org/en/publications/fandd/issues/2025/03/the-value-of-vocation-maria-petrakis)

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## Bibliographic details
- Authors: MARIA PETRAKIS
- Published: March 3, 2025

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### Overview
- Vocational skills training offers multiple economic benefits and is gaining recognition as a viable alternative to college education.
- Author: MARIA PETRAKIS. Publication: F&D Magazine. Date: March 2025.
- Vocational training can provide practical work experience and certification that serves as “a credible skills signal” to employers.

### Evidence on effectiveness and labor-market outcomes
- J-PAL review: 28 studies on vocational and skills training programs across countries including Argentina, Bangladesh, Türkiye, and the US.
- Uganda study:
  - Free six-month vocational training produced income gains larger and more sustained over time than a wage subsidy of $50 a month for six-month on-the-job apprenticeships.
  - In a COVID follow-up, vocational trainees were more likely to lose jobs at the pandemic onset but recovered and ultimately earned more over the course of the pandemic than peers not offered training.
- Project QUEST (US, health care sector):
  - Average annual earnings of participants was 26 percent higher six years later and 15 percent higher eleven years later compared with nonparticipants.
- J-PAL and researchers emphasize randomized controlled trials as the methodology informing vocational training research.

### Challenges and market mismatches
- August 2023 report (World Bank, ILO, UNESCO): technical and vocational education and training in low- and middle-income countries do not match labor-market needs and are unprepared for a large rise in future demand for these skills.
- Projected student growth in secondary technical and vocational education:
  - Burundi, Mali, and Uganda: expected to more than quadruple over the next two decades.
  - Niger: expected to rise tenfold.
- Labor-market mismatch: many college graduates are prepared for jobs that are not the ones hiring; vocational programs do not always bridge this gap unless well targeted to in-demand sectors.

### Program design features associated with success
- Credible, industry-recognized certification or diploma.
- Integration of practical work experience and soft skills training.
- Strong connections to employers and sectoral targeting.
- Targeted sectoral employment programs for people with low incomes or nontraditional backgrounds shown to produce substantial and persistent earnings increases.

### Costs, financing, and scale-up considerations
- Cost per person for vocational training programs varies 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.
- World Bank/ILO/UNESCO report suggests tapping private financing to scale programs.

### Relevance for developing economies and expanding markets
- Vocational training is particularly relevant where university degrees are out of reach or not well aligned with employer needs.
- Growing middle class and economic growth in Africa and Asia increase attractiveness for vocational providers and private investors.
- Example: Pitman Training (now owned by LaunchLife International) is seeking expansion in Africa with partners in Nigeria, Zimbabwe, Kenya, and Ghana, offering courses from secretarial skills to software and web development.

### Alternative pathways and public sentiment on higher education
- High-profile entrepreneurs (examples cited) illustrate successful nontraditional educational paths.
- Pew Research Center finding: Just 22 percent of Americans said that college is worth the money; almost half said the cost is worth it only if a student doesn’t have to take out loans; 29 percent said the cost is not worth it at all.
- Student debt relief and loan policy actions:
  - US: almost $180 billion in student debt relief ahead of the November 2024 election, helping 4.9 million borrowers.
  - Australia: $A 16 billion (about US$10 billion) debt cut for 3 million students and capped indexation on education loans after a 7.1 percent payment increase due to high inflation.

### Policy implications and recommendations
- Design vocational training programs carefully to include features shown to be most promising and appropriate to context.
- Target programs toward in-demand sectors to better bridge labor-market mismatches.
- Provide industry-recognized certifications, integrate soft skills, and build strong employer linkages.
- Consider leveraging private finance to supplement public spending, especially in low- and middle-income countries where public spending is under 0.2 percent of GDP.
- Monitor and evaluate programs using rigorous methods (for example, randomized controlled trials) to identify what works and to scale effective models.

*MARIA PETRAKIS, F&D Magazine, March 2025*

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## Content in this bundle

- **Petrakis**
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_Source: https://www.imf.org/en/publications/fandd/issues/2025/03/the-value-of-vocation-maria-petrakis_