Skills and skilled work:
extending the rationale for
intervention.
By
Francis Green
Objective
• highlight arguments for an extension to HCT theory's
rationale for social intervention in skill formation that
explain and support policies for social engagement
with, and support for, employers and workers to
promote skill formation and use
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Human Capital Theory and the
rationale for social intervention
• education:
– easy argument at school level on efficiency and equity grounds
– mixed at HE level
• workplace learning:
– 1960s-1980s. NO – employees pay for general training, while companyspecific skills are shared between firms and workers; no externalities
– 1990s. YES -- imperfect markets imply:
 firms contribute to transferable training
 employees and firms will not contribute enough
– 2000s: ? Where's the evidence that market failure is worse than
government failure?
3
Critique of HCT's rationale for
social intervention: 1
• HCT assumes individualistic, forward-looking
agents maximising utility/profit, with adequate
foresight. But skills are socially determined which
affects:
 employers' demand for skilled labour
 employers' supply of skill formation services
 individuals' demand for learning new skills
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Critique of HCT's rationale for
social intervention: 1
Employers' demand for skilled labour and supply of
opportunities for workplace learning are socially
determined:
• substantial differences in management effectiveness, within and across
countries and industries
• RBV: successful organisations develop core competencies
• human resources hard to imitate; HC embedded, less mobile;
managerial skills essential for 'dynamic capability': so demand for skill
a function of management strategy.
• strategies are influenced by management capacities and institutional
norms (which can change); are constrained by the past; and are not
uniquely determined by technology
•5 social agents may be able to develop better strategies
Critique of HCT's rationale for
social intervention: 1
Similarly, workers' demand for learning, in a world
with deep uncertainty, is socially determined:
•multi-causal structure with feedbacks involving
beliefs & expectations, resources, and preferences
 rationale for interventions to:
– break cycles of disadvantage
– sustain individuals’ resources (capacities,
information, self-efficacy)
– minimise learning barriers
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Critique of HCT's rationale for
social intervention: 2
• Neglect of the demand side of the economy.
– HCT assumes skills markets are flexible and thick.
– Dropping this assumption has two implications:
 the demand side matters, and governments can
consider policies that leverage both demand and supply
 governments should intervene to assist skill-matching
processes. IAG should not be a cinderella service;
equity not ignored.
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Critique of HCT's rationale for
social intervention: 3
• The nation state and skill
– HCT incorporates no concept of the nation state, other
than political economy models of vote maximisation.
– Dropping this assumption means that:
 governments and their citizens have interests in locating
skilled activities within nation state borders
 is the international "skills race" a regressive zero-sum
game?
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Conclusion
• existing arguments about balancing market failure against
government failure are legitimate, but need to be extended
• social interventions to improve managerial capacities and
ambitions w.r.t. skills may be warranted
• social interventions to assist individuals' navigation of
learning paths may be warranted
• nationalist interventions can be effective and have a
national rationale, though the international-perspective
rationale is more complex
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Thank you for your attention
LLAKES is an ESRC Funded Research Centre.
Francis Green
F.Green@ioe.ac.uk
The arguments in this presentation are
elaborated in Chapters 5, 6, 7 and 9 of :
Skills and Skilled Work: An Economic and
Social Analysis.
Oxford University Press (2013).
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