The Returns to Investments in Equipment Upgrades at Vocational Education Schools: Evidence from a RCT in Mongolia

We evaluate investments into equipment upgrades at Technical and Vocational Education Training (TVET) schools in Mongolia, a part of the Vocational Education Training Project sponsored by the Millennium Challenge Corporation (MCC) and designed to address the gaps in Mongolia’s vocational education system. The project seeks to increase the wages of poor Mongolians by improving their technical skills and productivity to meet labor market demand in key industries (including, among others, construction, mining, electronics, mechanics, and transport). More than half of MCC’s investment into the Mongolian TVET sector was spent on upgrading equipment and constructing and rehabilitating workshops. The upgrades of 19 categories of equipment in the ten schools participating in this study were completed in August 2013, ultimately affecting 21 trades.

We hypothesize that a school receiving the equipment upgrades will cause students in affected trades to be more likely to train with improved equipment. This experience with modern, relevant equipment will improve their factual understanding of the trade and familiarize the students with the tools used by employers. Employers should then find students more productive than they otherwise would, making it more likely that students will be able to find employment and increasing the wages that employers are willing to pay them.

2010-09-01

2016-01-31

Key outcomes include earnings, employment, type of employment, and graduates' trade-specific skills.

This study will primarily evaluate the incremental impact of school equipment upgrades on both academic and labor-market outcomes. Comparable control and treatment groups necessary to estimate the effect of TVET training was created through randomized admissions process in three consecutive academic years. Out of a pool of ‘qualified’ applicants, students were chosen at random to gain admittance to the school and randomly assigned to study specific trades. Surveys were administered to the entire pool of applicants at the time of the application, including a standardized general knowledge test to measure skill levels and academic performance. Shortly after graduation, a follow-up survey will be administered to collect information on labor-market outcomes, including wages and hours worked. Students will also complete standardized trade tests that measure knowledge and skills in specific trades. This follow-up survey will continue annually for three years.

Randomization done by computer

Randomization occurred at the level of the individual applicant to the TVET schools.

No

N/A

11,000 Applicants

2,886 applicants were assigned to study at schools in trades that received upgraded equipment.
8,126 applicants were not assigned to either a trade or school that received upgraded equipment.

MDE's for Monthly Exposure to Improved Equipment: Upper bound: 0.01 std. deviations for Skills Test scores; 0.42% Employment change; 1.7 USD monthly income change Lower Bound: 0.0056 Std. deviations for skills test scores; 0.24% Employment change and 0.94 USD monthly income change