Impact of formal vocational training on the earnings of self-employed individuals in rural India

Abstract

The study examines the impact of participation in formal vocational training on the earnings of rural self-employed individuals in India, based on both descriptive statistics and 2SLS based econometric analysis. The results show that even though formal vocational training helps self-employed individuals earn a higher income and that a great initiative has been taken by the government to promote skill development in recent times, a meagre proportion of rural self-employed has received formal vocational training. Therefore, there is a need for an appropriate policy attention towards enhancing the participation of rural self-employed individuals in the formal vocational training programmes on a grander scale. Moreover, a substantial heterogeneity is observed in terms of the duration of training programmes. A longer duration (12 months or more) training helps enhance the mean earnings significantly as compared to a relatively shorter duration training. Considering that a shorter duration training is cost-effective from the supply-side and entails a lesser opportunity cost for self-employed when it comes to participation, policy should revisit the course structure and curriculum of shorter duration training programmes in order to ensure that these become more effective in terms of fetching higher earnings.