_60_ _Policy, Planning, and Research Working Paper Series_ while his level of productivity is being evaluated and recognized. Such a worker has no incentive to move as long as the present value of the loss in earnings during the probationary period is greater than the present value ofthe loss incurred in remaining with the training firm at a wage below the market-level for his skill. in such cases this constraint on worker mobility will make it feasible for firms to assume a share in investment in the general-skills training of their workers - a result that qualifies the traditional theory of on-the-job training as developed by Becker.

This result may have some important implications for policy in countering the deleterious effects of such market imperfections as minimum wage legislation and a restricted capital market, on the supply of trained labor with general skills. It also suggests that training certification, in facilitating interfirm mobility, discourages on-the-job training by firms.

This paper is a product of the Education and Employment Division, Population and Human Resources Department. Please contact Cynthia Cristobal, room S6-001, extension 33640.

# 171. The Cost-Effectiveness of National Training Systems in Developing Countries

## Christopher Dougherty

_Schools should be responsible for teaching basic skills and the theoretical aspects of vocational training, and employers should be responsible for thepractical end - with on-the-job training supplemented in some cases by training at_ training _centers. Institutionalized pre-employment training for entry-level jobs is less costeffective-despite wishful thinkingthat_ **_it_** _provides an easy solution to the problem of mnass youth unemployment._ Which is better: school-based training (vocation education), center-based training, or on-the-job training (such as apprenticeship schemes)? Controversy about choice of training mode has been aggravated by three factors:

* Failure to recognize that vocational-technical training covers a broad spectrum, from ap-plied science education tojob-readiness training. Advocates and critics of a particular training mode who find themselves arguing at cross pur-

poses often have different points of this spectrum in mind.

* Insufficient appreciation of the training that is, or could be, provided - for example, by the private sector in the form of in-service training (apprenticed or otherwise) and training provided by proprietary schools, suppliers of equipment, and other sources.

* A tendency by planners to overestimate greatly the need for extended preemployment training for entry-level jobs. This bias is reinforced by wishful thinking that training can provide an easy solution to the problem of mass youth unemployment.

Drawing on a comprehensive survey of international experiences and issues, the author concludes that:

* Under favorable conditions (includingadequate financing), any training system can be effective. Considering the time and money it takes to execute radical change, it makes more sense to improve the performance of existing training systems than to try replacing them. The design of a training system is not so important as its ability to evolve in light of experience.

> * Planners should consider dividing responsibility between schools, employers, and training centers. Schools should be responsible for basic skills and the theoretical end of the vocational training spectrum, and employers should be responsible for the practical end - after the individual has entered the labor force.

> _*_ Ideally, for some occupations, employer-trained trainees should attend trainingcenters(whichmayormaynotbe schools) part-timetoaddtotheir theoreti- cal knowledge both during initial onthe-job training and later in their working life, as the need arises.

_*_ Full-time institutionalized training aimed at bringing the trainee to job readiness is likely to be less cost-effective for a number of reasons - and in many countries would place an intolerable burden on public funds.

This paper is a product of the Education and Employment Division, Population and Human Resources Department. Please contact Cynthia Cristobal, room S6-001, extension 33640.

172. **The Effects of Peru's Push to** Improve Education Elizabeth M. King and Rosemary T. Bellew _Peru's effort to expand public education from the mid-1950s to the 1960s has narrowed the educational gap between rural and urban residents, males and females_ - _but male urban students are still likely to advance furthest in school. At the primarylevel,studentachievementisgreatly improved by such material inputs as desks and textbooks._ From the mid-1950s to the 1960s, the government of Peru undertook a major expansion of public education, increasing the number of schools, requiring primary schools that offered an incomplete cycle to add grades, and increasing school inputs (principally teachers and textbooks).

The authors examine the effects of Peru's educational policies, and the effects of family background and community characteristics on the schooling levels of a sample of adults. Data on males and females were analyzed separately by birth cohort, using a sample of 5,644 females and 5,241 males aged 20 to 59. The authors found that:

* The government's policy to expand the schools played a major role in raising education levels and narrowing the gap between rural and urban residents, and males and females.

* The impact of parents' years of schooling and occupations on the educational levels of their children lessened over time as the supply of schools expanded throughout the country - an indicator that the link between socioeconomic background and access to schools had weakened.

* The relative effect of parents'education differed for sons' and daughters' schooling. Fathers' education had twice as great an effect on sons' schooling as mothers' education; for daughters, both parents'education had equivalent, strong positive effects.

* Primary schools expanded rapidly even in rural areas, so rural residence did not adversely affect the primary schoolingofmales. Urban orrural residence did matter greatly for females, however, suggesting less desire by rural parents to invest in the schooling of their daughters.

* Urbanresidenceattheageofl3remained an important determinant of educational attainment because of the great disparity between urban and rural areasin availability of secondary schools.

* The availability of material school inputs, such as textbooks and desks atthe primary level, had a large positive effect