Balancing power in vocational education: Micro foundations for Acemoglu and Robinson's state-society heuristic

Acemoglu and Robinson argue that a balance between State and Civil Society ("narrow corridor") is crucial for achieving both long-term civil liberty and effective government institutions. Although Acemoglu and Robinson present ample historical evidence for their thesis, they do not provide extensive micro-foundations for it. This paper aims to close that theoretical gap. We claim that the organizational structures within the Central European "dual system" of vocational education and training (dual VET) provide a compelling practical example of a power-balancing mechanisms. Our institutional economic analysis identifies four principles that balance power between the government and private firms within the dual system. This delicate balance of power facilitated the development of public training schemes, ultimately leading to one of the most stable and effective VET systems in the world.