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• Explore modular approaches to learning so that students
can move between education and work, as
in Denmark or in College to Careers in the United
States in postsecondary education. In the latter,
students complete modules with clear accreditation
and competencies acquired (often equivalent
to “expertise” levels), which allow them to monetize
the newly acquired skills in the labor market,
even before completing the full degree. Students
can then return to the community college and continue
to the next level of expertise. Nanodegrees or
microdegrees, offered by MOOC platforms Udacity
and Coursera in partnership with the private
sector, take the modular approach to online-based
education.
• Strengthen links between the private sector and higher
education and vocational systems. Ensuring that
graduates from the education system acquire jobrelevant
cognitive, socioemotional, and technical
skills requires that firms, universities, and vocational
schools, and current and future students,
become better connected. The German dual system
is a very formal and institutionalized way of fostering
these links, but there are other approaches.
Chicago’s reforms of the city’s community colleges
targeted curricula more explicitly to sectors with a
large presence in the region, including manufacturing
and insurance. Specific components of these curricula
were discussed with major employers in these
sectors to ensure relevance for the job market. 59
• Focus publicly financed training on new economy skills
and ICT skills. New economy skills are likely to be
underprovided by firms because the benefits do not
accrue solely to the firm. 60 Several youth employment
programs, such as Jovenes in Latin America,
combine technical training with socioemotional
skills for disadvantaged groups, and many have
had an impact on employment and earnings. 61
Vocational training institutes in developing
countries are starting to use the internet to deliver at
least parts of their courses. The Dominican Republic
training institute offers a wide range of online
courses, including teacher training and inventory
management, and reports particular interest from
youth and individuals who are already working or
who have family responsibilities. 62 MOOCs can also
be a tool for lifelong learning (box 5.10).
• Promote on-the-job training. Traditional market failures
limit on-the-job training 63 so one common
mechanism for promoting on-the-job training is to
have institutional arrangements between employers
and employees. “Payback clauses” commit the
worker to stay at the firm for a specific amount of
time if training is provided. In apprenticeships, the
worker shares the costs of training through lower
wages. The German apprenticeship system is a
well-defined program that relies on a dual system
of classroom training in vocational institutions and
training at the workplace.
A second common mechanism for on-the-job
training relies on financial arrangements that
internalize some of the externalities related to
employer-provided training. In developing countries,
this typically takes the form of training
funds, usually through payroll taxes, as in Brazil,
Chile, Malaysia, and Mexico. Other schemes
compensate firms for the cost of training through
levy exemptions, tax rebates, and cost reimbursements.
But as with other subsidies, these can be
inefficient and crowd out private expenditures on
training. It is, therefore, important to target the
subsidies carefully, trying to go beyond firm size,
as in Malaysia’s Human Resources Development
Fund. 64 In OECD countries, different cofinancing
savings and loan schemes match individual contributions
to contributions from employers and
governments. Individual learning accounts, learning
vouchers, and income-contingent repayment
loans are just some of the possible instruments
that could be used. 65
Box 5.10 Massive open online courses (MOOCs): A promising tool for
lifelong learning
MOOCs are a recent development in distance learning,
characterized by three key aspects: open enrollment,
online assessment, and an interactive forum. They separate
themselves from traditional distance learning tools
by providing postsecondary education in large scale. They
are mostly free, with fees for getting certifications. Some
popular courses’ enrollment reach over 100,000 students.
Platforms such as Coursera.org, Udacity.com, and edX.org
host these online courses, facilitate online discussions, and
assess participants’ performances. In the first two years
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