Dual TEVT education in Chile: why do companies train students?

This paper is part of the project 'Linking Education and Labour Markets: Under what conditions can Technical Vocational Education and Training (TVET) improve the income of the youth?' (LELAM TVET4Income). The project, financed jointly by the Swiss National Science Foundation (SNSF) and the Swiss Agency for Development and Cooperation (SDC), aims to find out under what conditions and to what extent TVET can help to improve the labour market situation of the youth, especially in east developed, low and middle-income countries. The project consists of six teams coming from five different countries and four continents: Chile, Costa Rica, Benin, Nepal and Switzerland.

The paper analyses the costs and benefits of dual training programmes for companies in Chile. Using an online survey, we estimate that Chilean companies that participate incur net costs of US$3,200 per student per year in training; however, most companies declared to be satisfied with dual training. We simulate two scenarios under which dual training is cost effective. The first scenario simulates a subsidy equal to the net costs for each student companies receive. The second scenario assumes an increase of 25 per cent in the productivity of apprentices, which reduces the students' time in practicing and increases the productivity of the workers in charge, decreasing their time dedicated to train the students by 50 per cent. Public policies to promote early adjustment such that students arrive at companies better prepared and can allocate more time to productive tasks should be considered to decrease the net cost of training.

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