The power of self-interest: Effects of subsidies for adult education and training

Education and training among the working-age population has become an increasingly important policy issue as working lives have lengthened and the pace of technological change has quickened. This paper describes the effects of a reform that broadened access to public subsidies for adult Vocational Education and Training. Difference-in-differences analysis reveals that the large-scale reform, which was introduced in the Australian state of Victoria from 2009, increased participation in VET among the population aged 25-54, and corresponded with an improved match between subsidised VET courses taken and ex ante measures of labour market demand. Indeed, the scheme was so popular that it resulted in a budget over-run by 2012 of $400 million (AUD, on a total budget of $1.3 billion).