If You Get What You Want, Do You Get What You Need? Course Choice and Achievement Effects of a Vocational Education and Training Voucher Scheme

Abstract

Outside of apprenticeships, allocations of public funds across vocational education and training (VET) courses are often made on the basis of government forecasts, with limited competition between (mostly public) colleges. This centralised model is often blamed for stifling responsiveness to skill demands and training quality. However, little is known about whether moving to alternative funding models improves outcomes. In this study, we exploit a natural experiment and population data to estimate the effects from the introduction of a broad-based voucher in VET in Australia. We show the voucher is associated with large increases in private college enrolments, improved match between course choice and employer demand, and higher student achievement, including in incumbent public colleges. Unlike studies in the school voucher literature, we find widespread benefits with no adverse impact on equity.