Varieties of Capitalism #2

Education and Job Training

Liberal market economies (LME) and coordinated market economies (CME), meanings here, differ on education and job training. There is an indication that countries with only a modest stock of firm-specific skills compensate by investing more in education. There is a negative correlation between tenure (time with the same employer) rates and university degrees. The USA is the archetypal case of an LME country with weak company and vocational training system, but a very advanced higher educational system. Indeed, a college education in the USA is considered a safeguard against an more volatile and more uncertain labor market.

In Anglo-Saxon countries university education tends to be very general, and even engineering and business schools provide very broad training not linked to a particular industry or trade. By contrast, in Japan and most continental European countries, many university degrees are more specialized and there tends to be stronger links between private industry and engineering and trade schools. While training systems produce a range of skills, each system can be roughly characterized by its emphasis on firm, industry, occupational, or general skills.