metadata: authors: 0: author: Ziderman,Adrian
count: Israel
docna: 0: docna: Israel's vocational training
docty: Policy Research Working Paper
subtopic: Labor Markets,Vocational & Technical Education,Vocational Education & Technical Training,Educational Sciences,Employment and Unemployment,Rural Labor Markets
teratopic: Gender
abstracts: cdata!: Eighty percent of the trainees headed
            for Israel's labor force go to full-time vocational
            secondary schools that devote a third to a half of the
            curriculum time to general studies. Students tend to come
            from a higher socioeconomic level than those in other
            training programs. The rest of Israel's vocational
            students are evenly divided among the Ministry of
            Labor's remaining three programs: the apprenticeship
            schools; the industrial schools; and the full-time training
            courses. Of the four types of training in Israel, vocational
            school is by far the most expensive. This paper confirms an
            earlier study that the apprenticeship system was the most
            cost-effective. However, to conclude that vocational
            training schools are not cost-effective is to ignore part of
            the picture. The goals of the vocational secondary school in
            Israel extend beyond those of providing usable labor market
            skills. In any cost-benefit evaluation of vocational
            schooling, these goals would have to be given more weight.
geo_reg_key: 119229,517191
repnme: repnme: Israel's vocational training
display_title: Israel's vocational training
listing_relative_url: /research/1988/07/437263/israels-vocational-training
topicv3: Labor Markets m1326488 855,Vocational Education and Technical
            Training m1326570 1573,Vocational Education and Training m1326810 483,Education m1327048 470,Apprenticeship m1327745 2132
publishtoextweb_dt: 2010-07-01T00:00:00Z
historic_topic: Gender
origu: Policy Plan & Prog Review Dept
no_of_pages: 22
author_keys: 0: author_key: 457027
model_extractions: **Polac,Pnnlng, and ResearchC**

# Education and Employment

Eighty percent of the trainees headed for Israel's labor force go to full-time vocational secondary schools that devote a third to a half of the curriculum time to general studies. Students tei.d to come from a higher socioeconomic level than those in other training programs.

The rest of Israel's vocational students are evenly divided among the Ministry of Labor's remaining three programs. The apprentice attends school one day a week and works on the job the rest of the time. The student is typically a low academic achiever with a low socioeconomic background.

Students in industrial schools spend three days a week in the plant where the school is located and three days in the school. The program is less demanding and more practical than the vocational school curriculum. No tuition is charged and trainees are paid for their work.

The one-year full-time training courses for 16 and 17-year-olds, mmny of whom are dropouts, concentrate on practical training. Those who complete the course get additional training in the army during their compulsory three-year service.

Of the four types of training in Israelvocational secondary schools, apprenticeship courses, industrial schools, and full-time training courses - vocational school is by far the most expensive. In 1977 Michael Borus found that the cost of apprenticeship courses was one-seventh that of vocational schools; industrial suiools and trairing courses cost only a third to a quarter as much. This 7-year longitudinal study confirms Borus' earlier tentative findings, concluding that since post-training earnings were roughly the same for all four programs, the apprenticeship system was the most cost-effective.

These findings echo those of case studies in other countries. But, to conclude that vocational training schools are not cost-effective on the basis of eventual earnings alone is to ignore part of tC. picture. The goals of the vocational secondary school in Israel extend beyond those of providing usable labor market skills. These wider social and educational goals are largely absent from the narrower and more workoriented types of training. In any cost-benefit evaluation of vocational schooling, these goals would have to be given more weight.

This paper is a product of the Education and Employment Division, Population and Human Resources Department. Copies are available free from the World Bank, 1818 H Street NW, Washington DC 20433. Please contactWorkie Ketema, room S-6228, extension 33651.

|TChe PPR Working Paper Series disseminates the findings of work undcr way in the Banles Policyh Planning, and Research Complex. An objective of the series is to get these findings out quickly, even if presentations are less than fully polishedL 'Me findings, interpretations, and conclusions in these papers do not necessarily represent official policy of the Bank.

Copyright 0 1988 by the Intemational E:ank for Reconstruction and Dvcvloprnent[Me World Bank
Israel's Vocational Training Adrian Zidcrman

# Table of Contents

|Page<br>Introduction<br>..............................<br>2<br> <br>|
|---|
|Training Modes for Youth .<br>.............................. 4<br>|
|Methodology<br>..............................<br>6<br> <br>|
|Reslts<br>..............................<br>10<br> <br>|
|Levine's Findings: A Retrospective View<br>.............. 15<br> <br>|
|Sumnmay and Implications .......................................<br>17|
# Introduction

In a widely quoted paper published a decade ago, Michael Borusi drew a cost effectiveness comparison between four vocational training modes - for youth in Israel vocational secondary schools, the traditional apprenticeship, factory-based industrial schools and intensive one-year state-run teenager courses. ExAmining the 1969 and 1970 earnings of a sample of 540 Israeli youngstere, born in 1947 and who had completed one of these training courses, Borus found thAt the r.elatively expensive, formal vocational secondary school courses were associated with a level of posttraining earnings not significantly different from the earnings derived from the three lower-cost alternative types of program. In particular, the non-formal apprenticeship courses were found to be very cost effective in relation to secondary vocational school courses.

These findings had important policy implications both in the domestic Israeli context as well as in the wider comparative international one. Whatever the institutional-historical reasons that may have accounted for the division of the training effort for youth amongst the various training modes in Israel,<sup>2</sup> these vocational training arrangements for the skilled trades are, over all, simply not cost-effective. Given that some 80 per cent of skilled workers in Israel are trained in vocational secondary schools, with only a minority receiving their training from job1/ Michael E. Borus, "A Cost Effectiveness Comparison of Vocational Training for Youth in Development Countries: A Case Study of Four Training Modes in Israel", Comparative Education Review. 21 February 1977): 1-13.

2/ On this, see Yaacov Iram and Chaim Balicki, "Vocational Education in Switzerland and Israel: A Comparative Analysis", Canadian and International Edueation, Vol. 9 (1980): 95-105.

2
based apprenticeships, these results Indicated the 4esirability, on economic grounds, of re-balancing the training effort in the direction of informal, industry-based methods.

However, the papor emphasized the tentative nature of these findings as well as policy conclusions emanating from them, in view of the relatively short post-training time horizon on which they **were** based - **at** niost five to **six** years, which included **a** three year period of compulsory army service. This note of caution **was** felt to be particularly appropriate with regard to the two mainstream modes, vocational secondary school **and** apprenticeships. In Israel, the former courses differ from the latter in givint due emphasis to general academic studies and to the theoretical, in addition to the purely practical, aspects of training; they would therefore be expected to prepare these students better for long-run advancement in their vocations. As Borus concluded, 'such advancemerm with attendant earnings gains could not be identified in the presen; . Future studies should attempt a longer follow-up period." Th1-i ^aveat constitutes the point of departure for the research reported in the **present** paper, in which the original sample (broadened by the inclusion of an additional cohort of former trainees born in 1948) is followed over a further 6-year period of experience in the labor market. Our now results prove to be confirmatory of the earlier ones which related to a very much shorter follow-up period and, in particular, they confirm the cost effectiveness of the apprenticeship over the vocational secondary school mode of training.

The caveat also evoked an imaginative response from Victor Levine,<sup>3</sup> who attempted to take account of the effect on the earnings profiles of possible additional on-the-job training acquired after course 3/ Victor Levine, 'Evaluating Vocational Training Alternatives Using Single Period Earnings Datat A Technical Note", Comparative Educational Review, 23 (February 1979): 125-133.

3
completion. Levine proceeded to compute social and private **rates** of return on investment in vocational secondary school training in relation to each of the other training modes. These results have been quoted authoritatively.4 We review Levine's results in the light of the new findings presented in this paper.

Trainina Modes For Youth The four distinct types of -rocarional training for youth in Israel which constitute the focus of this comparative study, differ in curriculum, length, as well as socio-economic background and academic level of student. Here we provide little more than a brief overview of these programs; the reader is referred to the earlier study by Borus<sup>5</sup> , as well 7 **as** to those by Iram and Balicki<sup>6</sup> and by Harberger, for a fuller account.

The dominant form, accounting for some 80 percent of trainees, is the vocational secondary school. Vocational schooling is full time and has three tracks, the highest one leading to the bagrut (matriculation) and entry to higher education. Curriculum varies according to track: one third to a half of curriculum time is given to general studies, the rer inder split between theoretical studies relating to the training trade and workshop practice. These schools, run by the Ministry of Education, **are** selective, charge tuition and attract pupils of a higher socio-economic 41 See D. Metcalf, Econcmics of Vocational Training: Past Evidence and Future Evaluations (Washington DCt The World Bank, 1985).

5/ Borus 61 Iram and Balicki 71 Perez F. Harberger, Vocational Education in Israel (Jerusalem: Ministry of Labour March 1967) 4
level than in other programs. For the rest, training is roughly split between **the** remaining programs of the Ministry of Labor. The apprentice attends school one day * **week, the** rest spent on practical training with **his employer; he** is typically a low academic achiever, with a low socioeconomic background. The industrial schools are located at the plants of major firms and provide three days a week of practical training in the firm's plant and 3 days of education in the school attached to the factory. The program is more practically oriented and less demanding than the vocational schools, no tuition is charged and trainoes receive payment for their output. One-year full-time training courses for 16 to 17-year-olds (many of whom are drop outs) are devoted almost entirely to practical training. Under a special agreement, the army provides both additional training and employment in the training specialty for completers of these latter courses during the 3-year compulsory army service following training.

Vocational schooling is by far the most costly mode. Borus showed the average societal cost per completer of apprenticeship courses to be only one seventh of that of vocational secondary school nourses, yet these two major alternative training regimes yielded roughly equal earnings. Similarly, industrial schools and short teenager courses also resulted in similar earnings to vocational secondary schools, but courses completer costs were only from one third to one quarter of the costs in vocational schools.<sup>8</sup> Thus, apprenticeship courses were found to be the most cost effective by far of available alternative training programs for youth in Israel.

8/ Borus.

**5**
# Methodolot,

**The** central question at issue is would the results of **the** earlier Borus study, relating to only two **years** of labor market experience following training (and, subsequently, three years army service), **he** confirmed when longer follow up periods **ar-** employed? Given **the** far greater input of general educational studies **and** training theory in the more formal industrIC ehools and, particularly, vocational secondary schools, it might bea -ugtht that, over the longer term, graduates of **these** institutions would achieva higher earnings than those of job-related, informal but perfunctory training modes. The wider scope of the educational programs offered in the more forml training institutions would mark out their graduates **as** those who would **be** better equipped to learn

from experience on-the-job, be more likely to be selected for junior supervisory tasks and, generally, to be more upwardly mobile within the internal labor market of the firm.

This, Is illustrated in Figure 1. While in the initial years of post-training experience (between B and C) the cross-sectional earnings of both apprenticeship and vocational secondary school course completers may be observed to lie at roughly the same level, over the longer term the average age-earnings profile of vocational school graduates would assume a steeper slope, generating a positive earnings (and significant productivity) gap between vocational school and apprenticeship course completers. Only longitudinal earnings data (as at year D) and unavailable to Borus, would pick up this earning gap. Of course, the identification of such an earnings gap would not, in itself, indicate that the policy conclusions stemaing from the earlier work were incorrect; but it would point to the need fcr a wider investment appraisal of the varioua training program alternatives, in terms of a comparison of the net present value of the long-term earnings stream minus costs for each training mode.

6
Figure _1_ <!-- Start of picture text --> Earnings<br><!-- End of picture text --> <!-- Start of picture text -->
- VOC<br>o  /  z~~~~~o<br>- ~~~APP<br>I  I  l  I  - vYocirs<br>0  A  B  C  D<br>Cross Sectional  LOnitn T.obn<br>Earnings  Observed  Follow-Up<br><!-- End of picture text -->

- We returned to the original trainee sample male graduates of the four training modes in the Tel Aviv area, all born in 1947. Borus had collected training and other background information relating to an additional cohort of trainees born in 1948, but they were not included in his earnings follow-up regressions. The sample was broadened to include the 1948 cohort of trainees, thus extending the small numbers of observations (from only 37 to 112) from the industrial school and short teenager course modes. Information on training trade (whether automotive, electrical or metal working trades), course length as well as name and (7 digit) identity number was available for each former trainee.

The earlier work of Borus was then duplicated for the (now extended) sample of completers of youth training courses but over a 6-year longer training period, and with certain changes in the form of the earnings equation regressions. These personal data relating to the sample were matched with individual earnings records maintained by the National 7
Insuranc- Institute (NII), for each of the yea:. 1969-1976. The NIX was asked *o supply names and earning& data for each individual in the sample, on the basis of identity number. The *arnings records maintained by the Institute are based on employee earnings reported by employers for purposes of national insurance payments. The earnings data made available to us by the NII gave info_.mati **on** the total annual earnings for each individual, accumulated across employers, **as** well **as the** number of months in the **year** for which earnings **were** reported. Since the NII records **are** recorded only by the last **six** digits of identity numbers, multiple earnings records **were** provided for each identity number requested. The matching of the Individual trainee data with appropriate earnings data on the basis of **a** common name proved to be no easy task. Name changes, death, war casualty and migration were among the factors militating against any straightforward matching of the training data with the NII earnings records. In all, 1233 matchings were achieved - **some** 72 percent of the original male trainee sample (Table 1).

Table 1 Lenath of Course. Four Training Modes

|Length of<br>Course|Vocational<br>Secondary<br>School|Apprenticeship<br>|Industrial<br>School|Short<br>Teenage<br>Course|All<br>r Modes|
|---|---|---|---|---|---|
|1 year or less|<br>-|...-<br>5|----------------------|------------------<br>58|------------<br>63|
|13-35 months|-|79|-|1|80|
|3 years|118|572|31|-|721|
|4 years|347|-|22|-|369|
|Totalsample|465|656|53|59|1233|

---------------------------------------------------------------------

_______ In **a** series of regressions, each relating to one of the years 19691976, earnings (EARN) are regressed against type of training program (TP), holding constant the effects of training trade (TT), length of course (LEN), 8
year born (Yb), year of course completion (COMP), and figration status (IM). **We** d'scuss each of these variables, in turn.

The dependent variable (EARN) rolates to individual earnings. The NII supplied information on recorded earnings for the identified sample of course completer.; this m*ssure might **appear** to be the tethxically *ppropriate one **as** it includes all those with earnings ga-, **and** thus **takes** account automatically of unemployment which may differ by training mode. Yet, these gaps, particul-arly when zero annual earnligs result, may reflect, rather more, such factors **as** temporary withdrawal from the labor force because of study, illness or periods spent abroad, than reflecting unemployment. Including only those individuals with positive earnings for any annual regression run provides a way of overcoming the pr. A of lengthy earnings gaps; but again, not all earning gaps of less than a year refl&ct unemployment. Both measures were tried in alternative regression runs. Since similar results were obtained, we present only those regressions in which EARN is measured by positive earnings. We used natural (positive) earnings as the regressor, rather than the more usual log specification, in order to keep our results comparable with those of Borus, who used the natural earnings measure. However, since all of our earnings observations relate to one small part of the age cross-section profile, there is less reason to fear that the earnings distribution in our sample departs from normality; the case for using log earnings thus becomes less compelling.

Training mode (TP) was entered as dummy variables: APP (apprenticeship), IND (industrial school), TEEN (teenager course), with VOC (vocational secondary school) in the constant term. Trainees had qualified in one of the three major training trades (TT) taught in the programs under - study electrician trades "ITEC), automobile mechanics (AUTO) and metal working trades (METAL). TT, entered as dummy variables, was included in the regressions to eliminate any differential effect of training occupation on subsequent earnings. Length of course (LEN), measured in units of a year, 9
_differs_ both within and between treining **modes** (Table **1).** Lengthier courses, in augmenting **Individual human capital** stocks, should lead to higher earnings.

**Trainees** completed their courses **in** different calendar years, from 1964-1967 (Table **2).** Year of course completion (COMP) is **added as** a continuous variable in serial form 1-4, corresponding to the years 19641967; the higher the value on the COMP coefficient, the lower would be expented earnings. Year of birth (YB) enters **as** a dummy variable (1947 - 0; 1948 - 1). Information on year of imigration was provided with the earnings data, by the National Insurance Institute. Since the labor market perform.nce of non-immigrants might be superior to that of Immigrants, a dummy variable imigrant status (IMM) was included (Israel born - 0; - Immigrant 1).

Table 2 Year of Course Completion by Training Mode

|Year of<br>Completion<br>1964|Vocational<br>Secondary<br>School<br>17|Apprenticeship<br>I-------I<br>-----<br>157|Industrial<br>School<br>..._____________<br>-----------------------<br>-|Short<br>Teenager<br>Course<br>_____________<br>--------<br>7|All<br>Modes<br>____<br>181|
|---|---|---|---|---|---|
|1965|217|339|17|33|606|
|1966|191|119|31|19|360|
|1967|40|41|5|-|86|

# Results

Turning first to the two dominant training alternatives, VOC and APP, annual positive earnings in these trades are regressed against training program (with APP entering as a dummy variable and VOC in the constant term), and against other relevant variables for each of the years 1969 tu 1976 (Table 3). Holding other variables constant, no significant differences between annual earnings of VOC and APP are reported apart from 1969, when the 10
lover annual earnings of APP (compared with VOC) Is on the margin of slgnificance only, at the 5 poecont levol; In **general the** overall **findings** (and policy eonclusions) of Borus are confirmed. All of the other variables are insignificant for most of the years **except** for COMP. Earlier course completion leads to higher earnings at the beginning of the followup horizon (no douibt **due** to greater post-training market **experience),** though this earnings advantage gradually washes out. The earnings data for the years 1975 and 1976 were Incomplete (many firms had as yet failed to report their employees' earnings) when recwived from the NII in the late 1970. **Because** of the small nuaoer of observations for 1976, the regression results for that year **are** not reported here, but they do follow the goneral pattern.

11
Tcble 3

**RArroseion** of Annual **Positive gavninse (Israeli lirot)*** on Two

Haior Youth Treinini Proarans. 1969-1975 1969 1970 1971 1972 1973 1974 1975 Independent Variables**:

|Training<br>Program:||||||||
|---|---|---|---|---|---|---|---|
|APP|-1055|-361|-52|-596|-1592|<br>-87|-1480|
||(2.37)|(0.88)|(0.09)|<br>(0.85)|<br>(1.56)|(0.06)|(0.40)|
|voc|--|--|--|-|--|--|--|
|Training Trades||||||||
|AUTO|-545|<br>!86|585|1147|439|-780|-905|
||(1.43)|(1.13)|(1.19)|(1.95)|<br>(0.52)|(0.66)|(0.30)|
|ELECT|71|22|87|416|396|<br>1593|<br>9460|
||(0.17)|(0.06)|(0.16)|<br>(0.64)|(0.42)|(1.20)|(2.92)|
|METAL|--|--|--|--|--|--|--|
|LEN|657|-1066|-492|-972|-159|<br>473|2860|
||(1.56)|(3.15)|(1.04)|<br>(1.66)|(0.18)|(0.40)|(0.91)|
|COMP|-971|<br>-731|-1512|-1801|-2139|-1501|-2890|
||(4.10)|(3.60)|(5.30).|(5.08)|<br>(4.22)|(2.06)|(1.62)|
|YB|-851|<br>-215|3|482|56|-798|1424|
||(1.70)|(0.72)|(0.01)|<br>(0.92)|<br>(0.07)|(0.75)|(0.54)|
|IMM|64|-291|-197|-401|-982|-2237|5047|
||(0.21)|(1.03)|(0.49)|<br>(0.82)|<br>(1.41)|(2.27)|(2.04)|
|Constant***|11057|13098|14693|19965|24021|30059|37183|
|R2|0.045|<br>0.048|0.052|0.046|0.033|0.021|0.046|
|n|884|<br>953|889|891|788|<br>835|554|

NB t statistic is shown in parentheses

- The Israeli lira has been superceded by the new shekel (1 new shekel - 10.000 lirot)

- ** For definition of independent variables, see text.

* The constant term contains VOC, those born in 1947 and Israeli born.

12
**Does the** picture change when IND and TEEN training program variables **are added as** in the regressions shown in Table 4? A similar **pattern** emerges with regard to the other independent variables, and the regressions again have low overall explanatory power. With the other variables held constant, no significant earning, differentials are reported between VOC and between APP (again, except for 1969) and IND, respectively. However, for **a** number of tho regression runs, the coefficient on TEEN is negative and significant. Although not in line with those of Borus, this particular result is not altogether unexpecteds most of **the** studonts enrolled in TEEN came from low socio-economic backgrounds and many were dropouts from **secondary** schooling. Nore important, tho courses though full-time, lasted for up to a year only (compared with three or four years for other training modes, notably VOC).

Overall, **we** do not see evidence of **an** earnings gap emerging over the longer term **between the** different training modes and particularly between VOC and APPg tho **earlier** results of Borus, relating only to two years posttraining labor market experience, **are** largely confirmed.

13
|Regression<br>ofAnnual <br>Four Youth|**Poattiw.**<br>**Trainina**|Zarnin<br>**Prori**_|s**(Ir-ali**<br>.1969-1|ltrot<br>975|*on||
|---|---|---|---|---|---|---|
|**1969**<br>**1**|**970**<br>**19**|**71**<br>**1**|**972**<br>|**1973**<br>**1**|**974**|**1975**|
|Independent|||||||
|**Variables**s**|||||||
|TrainingPrograms|||||||
|APP<br>-873|-233|-49|-606|-1721|-482|-2441|
|(2.04)|(0.59)|(0.08)|(0.84)|(1.36)|(0.35)|(0.72)|
|IND<br>-40|459|1471|2406|1697|91|1876|
|(0.05)|(0.68)|(1.50)|(1.86)|(0.73)|(0.04)|(0.31)|
|TEEN<br>-1427|-3317|-2928|-4723|-573|-3483|-6272|
|(1.26)|(3.17)|(2.81)|(2.33)|(0.16)|(0.97)|(0.71)|
|VOC<br>-.|--|--|--|--|--|--|
|Training<br>Trades|||||||
|AUTO<br>-584|388|839|992|791|-650|-1023|
|(1.56)|(1.15)|(1.73)|(1.63)|(0.75)|(0.56)|(0.36)|
|ELECT<br>17|-44|46|371|468|1681|9558|
|(0.04)|(0.12)|(0.09)|(0.54)|(0.40)|(1.28)|(3.05)|
|MET<br>--|--|--|--|--|--|--|
|LEN<br>-417|-871|-424|-1057|34|29|1634|
|(1.25)|(2.83)|(0.93)|(1.84)|(0.03)|(0.03)|(0.61)|
|COMP<br>-1023|-824|-1439|-1659|-2578|-1488|-2168|
|(4.53)|(4.25)|(7.42)|(4.62)|(4.19)|(2.06)|(1.30)|
|Y8<br>-640|-180|-122|356|-570|-1297|536|
|(0.08)|(0.63)|(0.30)|(0.67)|(0.63)|(1.27)|(0.22)|
|IMM<br>82|-316|-455|-341|-358|-2087|-5142|
|(0.28)|(1.19)|(1.20)|(0.70)|(0.43)|(2.23)|(2.25)|
|Constant***<br>10342|12604|14477|19990|24248|31709|41616|
|R2<br>0.049|0.051|0.052|0.040|0.030|0.025|0.052|
|n<br>972|1049|975|972|859|910|611|

NB t **statistic is** shown in **parentheses**

- **The Israeli** lira **has been** superceded by the new shekel (1 **new shek-l** - 10.000 lirot)

** For definition of independent **variables, see** text.

***** The** constant **term** contains VOC, those born in 1947 **and** Israeli born. - 14 -
# Levine's Findings: A Retrospective View

**We** now take a fresh look at Levine's conclusions, in **the** light of our new findings. We have noted above that Levine reworked the results presented in the earlier paper by Borus to compute private and social rates of return to investment in these formal courses of training, after taking into account the effect on the earnings profiles of the possibility of additional, on-the-job, training acquired after training course completion. Although the ranges between Levine's rates of return estimates employing a] rnative assumptions were very broad, the superiority of apprenticeship over vocational school investments was confirmed; however, Levine's results were agnostic with regard to the comparative profitability of vocational secondary school courses vis-a-vis industrial schools and the short staterun toonager courses. Overall, the policy conclusions stemidng from Levine's rate of return results were not incompatible with those of the costeffectiveness comparison presented by Borus.

Levine's central assumption is that the Borus result, showing equal post-training course earnings for each training mode, was fortuitous: for periods other than that over which cross-sectional earnings happened to be observed, earnings would differ amongst training modes. Consider Figure 2.9 Individual A has invested less in formal schooling and training courses than individual B and, in the absence of further training (on-the-job), would receive hypothetical earnings EA (< EB). Levine argues that A would be expected to invest less in general training on the job than B (ab < cd)IO resulting in less-steep actual earnings profiles (Y) for A than B.

# 9/ Levine.

10/ Levine here follows the approach outlined in the well known human capital investment model of Yoram Ben-Porath, Production of Human Capital and Lifecycle of Earnings", Journal of Political Economy, 75 (August 1967): 352-365.

15
> TA and Ts coicide at Z, the tim point at which croe*-eectioal

**earnLis**

'eep.." to be sbveds **for etbag yeem sat** **_eamab. of_** _A_ sa _a_ **differ.** FOLM 2 <!-- Start of picture text --> Y8<br><______________ s years<br>z<br><!-- End of picture text --> The problm with tie line of _raeooLng Le_ that while offering a possible explenation for non sinifticantly dLfforent **oarnin g** between two training modes at point Z, it is improbable that the **separate** wage profiles of all Jog training **modes** under sgrutlny would happen to coLncLde at year Z. Average course length differs (Table 1), **as** does previous human capital investmsnt for each trainLng mode, factors which would result In differLng **subsequent** lnvetmentc in training on-the-job. As LevLn himself notes'persons with more formal schoolLng (and tralnLng) tend to have steeper age **earnLngs** profles. end that those making "larger pro-entry lnvestments..also tend to Lavest more heavily later on."l Thus, the vertLcal distance lndicating initial Lnveetment ln on-the-job training (e.g. ab for indivldual A.) would vary positively with prevLou human capital lnvestments, as would the steepness of the earnings profiles.

11/ Levine, page 130.

16
(corresponding to YA in Figure 1), **an** assumption that is clearly at<sup>odds</sup> with Levine's Table 2 (derived frots Borus) showing differing training costs for these three training modes. Thus little credence can<sup>be given to the</sup> particular rates of return results presented in Levine's paper,<sup>a conclusion</sup> that is buttressed by the findings, presented earlier in the<sup>present paper,</sup> that earnings do not differ significantly across the main<sup>training modes,</sup> over seven years of post-training experience in the labor market.

Summary and Implications The earnings of 1233 !ormer trainees in Israel were monitored<sup>over</sup> a seven **year** period. Earnings functions were estimated in<sup>the form of a</sup> series of v. ltiple regressions, with annual earnings as the<sup>dependent</sup> - variable and type of training program attended vocational secondary<sup>school,</sup> traditional apprenticeship, factory-based industrial school<sup>and short</sup> - Ministry of Labor teenage course included amongst the independent variables. Generally, no significant differences in the earnings<sup>of the</sup> graduates of the different modes were found, in a series of<sup>regressions run</sup> on annual earnings data for the years 1969-1975.

These findings viewed against the relative costs of alternative training modes confirm those of an earlier study by Michael Borus relating to a much shorter post-training earnings follow-up period; they suggest that,<sup>on</sup> cost-effective grounds, the balance of training provision<sup>for youth in Israel</sup> is not e*,ficient. The vast majority of skilled workers are trained in relatively expensive vocational secondary schools which, perhaps surprisingly, offer no earnings advantages (even in the longer<sup>term) over</sup> cheaper, work-related, training programs. On cost-effective grounds, the desirability of a redirection of the training effort in Israel<sup>towards more</sup> direct job-related training, and in particular the formal apprenticeship,<sup>is</sup> indicated.

17
Our finding that, in the context of training for the skilled trades, vocational secondary schools in Israel **are** not cost-effective, needs to be tempered with a note of caution. The goals of vocational secondary schooling in Israel, **as** is frequently the **case** elsewhere, extend beyond those of providing usable labor market skills, the focus of the present study. The wider social and educational goals of vocational schools in Israel, largely absent for the other, narrower and more work-orientated training modes, would have to be given due weight in any fuller cost-benefit evaluation of vocational schooling in Israel.

However, to **the** extent that our concern is with the labor market ontcomes of vocational schooling, our negative findings echo those that emerge from the sizable case study literature on these issues from other countries 12 121 For recent reviews see Metcalf, and C. Dougherty, Cost-Effectiveneos of National Training Svstems in Developing Countries: Issues and Experience, (Washington, DC: The World Bank, 1988).

18
PPR Working Paper Series

||Title|Author|Date|Contact|
|---|---|---|---|---|
|WPS13|Objectives and Methods of a World||||
||Health Survey|Trudy Harpham<br>Ian Timaeus|June 1988|A. Menciano<br>33612|
|WPS14|The Optimal Currency Composition<br>of<br>Externai Debt|Stijn Claessens|June 1988|S. Berteismeler<br>33768|
|WPS15|Stimulating<br>Agricultural<br>Growth and<br>Rural Development in Sub-Saharan<br>Africa|Vijay S. Vyas<br>Dennis CaFley|June 1988|H. Vallanasco<br>37591|
|WPS16|Antidumping<br>Laws and Developing<br>Countries|Patrick M4esserlin|June 1988|S. Torrijos<br>33709|
|WPS17|Economic Development and the Debt<br>Crisis|Stanley Fischer|June 1988|C. Papik<br>33792|
|WPS18|China's Vocational<br>and Technical<br>Training|Harold Noah<br>John Middleton|June 1988|W. Ketema<br>33651|
|WPS19|Cote d'lvoire's Vocational<br>and<br>Technical Education|Christiaan<br>Grootaert|<br>June 1988|R. Vartanian<br>34678|
|WPS20|<br>Imports and Growth in Africa|Ramon Lopez<br>Vinod Thomas|June 1988|61679|
|WPS21|Effects of European VERs on Japanese<br>Autos|Jaime de Melo<br>Patrick Messerlin|June 1988|S. Fallon<br>61680|
|WPS22|Methodological<br>Problems in Cross-<br>Country Analyses of Economic Growth|Jean-Paul<br>Azam<br>Patrick Guillaumont<br>Sylviane Guillaumont|June 1988|E. Zamora<br>33706|
|WPS23|Cost-Effective<br>Integration<br>of<br>Immunization<br>and Basic Health Services<br>in Developing<br>Countries: The Problem<br>of Joint Costs|A. Mead Over, Jr.|July 1988|N. Jose<br>33688|
PPR Working Paper Series

|Title|Author|Date|Contact|
|---|---|---|---|
|WPS24 World Bank Investments in Vocatio.nal<br>Education and Training|John Middleton<br>Terri Demsky|July ;988|W. Ketema<br>33651|
|WPS25 A Comparison of Alternative<br>Training<br>Modes for Youth in Israel: Results<br>from Longitudinal<br>Data|Adrian Ziderman|July 1988|W. Ketema<br>33651|
|WPS26 Changing Patterns in Vocational<br>Education|John Middleton|July 1988|W. Ketema<br>33651|
|WPS27 Family Background and Student<br>Achievement|Marlaine E. 'ockheed<br>Bruce Fuller<br>Ronald Nyirongo|<br>July 1988|R. Rinaldi<br>33278|
|WPS28 Temporary Windfalls and Compensation<br>Arrangements|Bela Balassa|June 1988|N. Campbell<br>33769|
|WPS29 The Relative Effectiveness<br>of<br>Single-Sex<br>and Coeducational<br>Schools<br>in Thailand|Emmanuel Jimenez<br>Marlaine E. Lockheed|||
|WPS30 The Adding Up Problem|Bela Balassa|||
|WPS31 Public Finance and Economic Developmen|t Bela Balassa|||
|WPS32 Municipal Development Funds and<br>Intermediaries|Kenneth Davey|July 1988|R. Blade-Char:<br>33754|
|WPS33 Fiscal Policy in Commodity-<br>Exporting LOCs|John Cuddington|||
|WPS34 Fiscal Issues in Macroeconomic<br>Stabilization|Lance Taylor|||
|WPS35 Improving<br>the Allocation and Manage-<br>ment of Public Spending: Some<br>Lessons of African Experience|Stephen Lister|||
|WPS36 Means and Implications<br>of Social<br>Security Finance in Developing<br>Countries|Douglas J. Puffert|||