Does an employer training levy work? The incidence of and returns to adult vocational training in France and Britain

Abstract

AbstractWe examine two different policy regimes towards continuing vocational training for the adult workforce: policy in France has been interventionist, using an employer training levy since the 1970s, whereas British policy has relied largely on individual initiatives for training investment by employers and workers.We begin with a review of the theory of vocational training, indicating why market failure and underprovision are the likely outcome and signalling types of corrective policy that might be adopted. We set up hypotheses about the likely impact of policy in France relative to Britain to provide a framework for evaluation. We present a detailed comparison of the two systems in observed training incidence and the returns to training captured by workers and employers, drawing on a wide range of econometric studies. We conclude with an assessment of the employer training levy in France and suggest ways it could be modified if adopted in Britain.