This chapter examines the analytic and empirical foundations of the new consensus, and summarizes the facts that motivate recent concerns about the labor market. The chapter considers the evidence concerning the argument that public policies for postsecondary education and training are biased toward formal academic education and away from vocational skills training. It also examines the German system, and provides some background on how it operates. American youth are said to experience a disorderly transition from school-to-work characterized by too much job turnover and too little training on the job. The Brookings group claims that many young people have excessively high discount rates and that credit markets for financing training are imperfect. The training wage varies by sector with larger firms paying more than smaller firms. An important feature of private sector training is that the more skilled do more investing even after they attain high skill levels. © 1994 by the Milken Institute for Job and Capital Formation. All rights reserved.
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