Does Vocational Education and Training Help Reduce Poverty at the National Level? An Analysis of the Indian Economy

Abstract

Vocational education is considered an effective policy tool in reshaping the socio-economic outcomes of a nation. The Indian government has undertaken several initiatives to promote skill-based technical education in the country, though the macroeconomic impact of vocational education programmes on redressing development outcomes, particularly poverty reduction, requires a broader evaluation. Studies are extremely limited that have examined the role of vocational education at the national level in any human capital models, specifically for the Indian economy. Therefore, this study investigates how vocational education has affected poverty in India over the last three decades using annual data from 1990–1991 to 2019–2020. Following a traditional human capital framework, the long-run and short-run relationships between vocational education and poverty have been examined based on the usual autoregressive distributed lag model. The findings confirm the potential of vocational education in reducing poverty in both the short- and long-run periods for the Indian economy. The study also conducted diagnostic tests, ensuring robustness and stability of the estimated model. Based on the major findings, we highlight the importance of vocational education as a major education and labour market policy tool in terms of ensuring more inclusiveness for people below the poverty line.