Budapest Working Papers on the Labour Market No. BWP - 2011/5
Social research has long pointed to the apparent effectiveness of vocational education and training (VET) at the secondary level combining school-based vocational education with employer-provided training (so called "dual systems") in preparing non-college bound youth for the labor market. This study uses the Hungarian transformation process to better understand what makes dual system VET sustainable and effective. The two key questions we address are: Can employer involvement in dual system VET be sustained in the context of liberal labor market reforms? Is employer involvement required for the effectiveness of VET? Hungary had inherited an extensive dual system VET sector, but the liberal reform approach in the course of transformation has created a hostile environment for voluntary employer provision of training places for VET students. The decline in employer-provided training places has, however, been compensated by increasing training provision inside vocational schools. Results from differences-in-differences and triple-differences analyses show that the substitution of employer- with school-provided training did not affect the quality of VET graduates' jobs. However, the shift in training provision between 1994 and 2000 alone has raised young male VET graduates unemployment rate by 10 percentage points in the first year after graduation.