The impact of vocational training on earnings in Bangladesh

In Bangladesh, persistent skills mismatches, limited access to formal training, and the dominance of informal employment continue to hinder earnings growth and increase income inequality. Despite the promotion of vocational training as a crucial policy tool for improving productivity and employability, there remains a dearth of robust empirical evidence on its wage returns. This paper examines the impact of vocational training on earnings in Bangladesh. It uses data from the 2016–17 Quarterly Labour Force Survey (QLFS) conducted by the Bangladesh Bureau of Statistics (BBS). The study focuses on the fourth quarter of the QLFS, which includes 16,437 individuals engaged in economic activities. To account for non-random selection into training programs, the study employs propensity score matching (PSM), with propensity scores estimated using a probit model. The results indicate that vocational training has a statistically significant positive impact on earnings. Depending on the matching technique used, individuals who receive vocational training earn approximately BDT 1956–3229 more than those who do not. These findings suggest that vocational training plays an important role in enhancing income levels and reducing earnings inequality in Bangladesh. However, the study relies on cross-sectional data and cannot capture long-term earnings trajectories, training quality, or post-training job mobility. Strengthening training infrastructure, expanding access, and aligning vocational curricula with labor market demand are therefore essential to maximize the long-term economic and social returns of vocational training policies.