Who benefits from Dual Training Systems? Evidence from the Philippines

Abstract

Rising youth unemployment rates have been increasingly recognized as a serious challenge in developing and advanced economies, suggesting a potential skills gap between the demand and supply of recent graduates. Effective dual education programs which utilize a combination of classroom instruction and practical skill training are usually presented as an approach to develop a skilled workforce and meet employers’ demands. This paper analyzes data from a recent survey tracking graduates from the Philippines’ Dual Training System (DTS), as well as from regular programs provided by technical vocational training institutes. The evidence suggests that the DTS has a signi!cantly higher rate of returns on labor market earnings than regular, classroom-only vocational training programs, particularly among high school graduates who did not perform well academically during basic education. The magnitude of the impact of the DTS is also likely to increase in correlation with the intensity of the on-the-job component.

JEL classification: I21, J24, O15