The training market is a market-like mechanism through which many governments organize publicly financed training programs, such as training for unemployed young people. A range of providers, including for-profit training companies, compete for public contracts. Relative to public administration, the potential benefits of the training market are lower costs and faster innovation. The potential losses include service quality, insofar as for-profit training providers exploit their informational advantage to increase profit by supplying low-quality services. Reputation effects, external inspection, and noneconomic motivation potentially curb such behavior. Low quality may also result from political incentives to the prioritization of quantity over quality. © 2010 Elsevier Ltd. All rights reserved.
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