Human capital formation and local economic performance

This paper is concerned with the interaction between the vocational education and training system (VET) and local economic performance in Britain. After briefly discussing the shortcomings of Britain's VET system, the paper examines the way in which the education and training system and the local economy interact. In particular, it is argued that the outputs from the local education and training system determine, and are determined by, the locality's stock of high-skill workers. These high-skill workers, in turn, help to determine the competitiveness, and hence the economic performance, of the local economy. This has feedback effects on the stock of high-skill workers through its effect on the occupational mix of in-migrants. Some empirical tests of the model are provided based on data relating to 107 local education authority areas in England.