investments in human capital and facilitate people to invest in themselves through enterprise-driven onthe-job and vocational training, and to support agglomeration of enterprises and people for enhanced knowledge spillovers, in particular urban agglomerations that attract, retain and spur interaction of talent.

Based on an analysis of more than 100 education-to-employment initiatives from 25 countries (selected on the basis of their creativity and effectiveness), and a survey of youth, education providers, and employers in nine countries that are diverse in geography and socioeconomic context (Brazil, Germany, India, Mexico, Morocco, Saudi Arabia, Turkey, the UK and the US), Mourshed et al. (2012) argue that a big part of the skills policy solution is to oblige educators to step into employers’ shoes and employers’ to step into educators’, and students to move between the two – by reinventing vocational and on-the-job training, with two promising trends. First, technology is greatly reducing the cost of vocational education with a range of replicable models including:

- “serious games” facilitated by computer technology advances provide young people with a chance to gain virtual hands-on experience at minimum cost

- Colombia’s Labor Observatory provides details on the graduation and employment rates of every educational institution in the country, disseminating information about education and employment demand, and thereby empowering students to select programs leading to good pay, and incentivizing schools to become more relevant to the workplace (and improving flow of information to manage risk via more rigorous and continuous monitoring and evaluation).

And second, private and public sector institutions are coming up with ideas to improve vocational training, with agreements between private sector employers and community colleges pulling the educational curriculum towards market needs. Recent examples include:

- Korea has created a network of vocational schools, labeling students as “young meisters” in order to counteract the country’s obsession with academic laurels (from the German for ‘master craftsmen’

- China Vocational Training Holdings specializes in matching students with jobs in the Chinese car industry by keeping masses of data on both students and companies

- Mozilla (creator of the Firefox web browser) has created “open badges initiative” that allows people to get recognition for programming skills (importance of certification to signal quality of training)

- IL&FS Skills gives Indian students a job guarantee if they finish its courses, with training contracts helping to deal with poaching externality (Almeida et al., 2012).

Another policy area ripe for joint federal and local reforms in coordination with the private sector is the urban dimension of entrepreneurship and absorptive capacity development, namely the enhancement of the livability and “stickiness” of cities, to attract and retain talent. Recent evidence shows that local agglomerations of firms in specific technology areas, which likely increase technology and supply-chain spillovers, also reduce income uncertainty of skilled workers (Ellison et al. 2010) – which puts a premium on appropriate urban policies as part of desirable skills upgrading policies.

International experience suggests that much of the absorption of existing frontier technologies and the nurturing of technological advances are likely to be concentrated in a few metropolitan regions. Half of the productivity growth recorded by the US between 2000 and 2008 was by 20 metropolitan areas, with these cities accounting for 40% of GDP (McKinsey 2011). The shift in population as workers move from rural agriculture to urban areas that facilitate face-to-face learning and creative interactions between young entrepreneurs, skilled people, and institutions connected to global knowledge should help unleash 28