How do Technical Education and Vocational Training Affect Labour Productivity in India?

Educationists have had long debates on the efficacy of traditional forms of education versus vocational training. Even as India grapples with the challenges of improving the quality of primary and secondary education, there appears to be a policy shift in India, favouring vocational trainings that target the skill development of workers. This paper tries to analyse the impact of two types of technical education—one leading to an engineering degree or diploma and the other, to vocational training in selected fields such as Information and Communications Technology (ICT)— on firms operating in the manufacturing sector in India. A Cobb Douglas production function has been enhanced to incorporate education and training in order to understand the implications of the latter on firm performance. The results show that when a larger number of workers acquire technical education that leads to a degree or diploma in engineering, there is a positive impact on the performance of firms. In contrast, participation in vocational training programmes pertaining to similar disciplines has an insignificant effect on firms.