Can German vocational training combat skill shortages in developing countries? Evidence from dual training system in the Philippines

Yamauchi, Futoshi; Kim, Taejong; Lee, Kye Woo; and Tiongco, Marites. 2023. Can German vocational training combat skill shortages in developing countries? Evidence from dual training system in the Philippines. Review of Development Economics 27(4): 2470-2488. https://doi.org/10.1111/rode.13047

This paper examines the labor market impacts of the Philippine Dual Training System (DTS), a vocational training program that combines firm‐based on‐the‐job training (OJT) and conventional institution‐based training, using a recent survey that tracked graduates from DTS and regular institution‐based programs. The estimation results using fuzzy regression discontinuity design show a significantly positive impact on the most recent monthly earnings. The impact significantly increases with the OJT intensity, measured by the number of hours a week in OJT. The above results imply that vocational training has to be aligned with actual production technologies and work practices to narrow skill gaps and create positive returns.