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Market Forces for the Unemployed? Training Vouchers in Germany and the USA

Market Forces for the Unemployed? Training Vouchers in Germany and the USA Vouchers are meant to increase competition and consumer choice in public service markets. Using the example of training vouchers for the unemployed in the USA and Germany, we show, however, that deficits, both on the demand and the supply side of the market, create problems with preference alignment and market formation. Information asymmetries undermine choice by the unemployed and reduce government control over the training system. Ironically, restrictions meant to compensate for these information deficits further inhibit competitive market formation. Evaluation data on training vouchers from both countries show that voucher systems do not increase choice, but weaken the partnerships public employment agencies previously had with training providers, and may lead to a shortage of high‐quality and specialized training, as well as creaming in the selection of training participants. Theoretical justification for vouchers is based on the notion of choice and consumer sovereignty. Using this framework to analyse the changed relationship between government, private training providers, and jobseekers, we challenge the efficacy of vouchers as a delivery mechanism in complex public service markets such as job training. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Social Policy & Administration Wiley

Market Forces for the Unemployed? Training Vouchers in Germany and the USA

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References (36)

Publisher
Wiley
Copyright
Copyright © 2008 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0144-5596
eISSN
1467-9515
DOI
10.1111/j.1467-9515.2007.00589.x
Publisher site
See Article on Publisher Site

Abstract

Vouchers are meant to increase competition and consumer choice in public service markets. Using the example of training vouchers for the unemployed in the USA and Germany, we show, however, that deficits, both on the demand and the supply side of the market, create problems with preference alignment and market formation. Information asymmetries undermine choice by the unemployed and reduce government control over the training system. Ironically, restrictions meant to compensate for these information deficits further inhibit competitive market formation. Evaluation data on training vouchers from both countries show that voucher systems do not increase choice, but weaken the partnerships public employment agencies previously had with training providers, and may lead to a shortage of high‐quality and specialized training, as well as creaming in the selection of training participants. Theoretical justification for vouchers is based on the notion of choice and consumer sovereignty. Using this framework to analyse the changed relationship between government, private training providers, and jobseekers, we challenge the efficacy of vouchers as a delivery mechanism in complex public service markets such as job training.

Journal

Social Policy & AdministrationWiley

Published: Feb 1, 2008

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