Is There Scope for Policy?

This chapter discusses how design of training policies is strongly related to the type of market failures conducive to under-provision. The empirical evidence on the relevance of efficiency and equity issues is considered, and a political economy view of training subsidies is proposed. Furthermore, the key features of the training policies in place and the implications for training and product market reforms are examined, along with the evidence on the effect of training on turnover and the limited evidence on the importance of credit constraints. The chapter concludes that one needs to be prudent when designing public policies aimed at raising the provision of workplace training; there is no clear-cut evidence that the level of workplace training produced by firms and employees is significantly lower than the socially efficient level; governments have an important role to play in improving information about training opportunities, setting appropriate legal frameworks, and ensuring portability of skills; product and labour market reforms do affect training participation.