From a continuous time, overlapping generations model in which individuals make optimal schooling choices, we analyse the impact upon production of a 6-months and one-year vocational training policy across working life.
Each individual chooses her optimal schooling time during which she will accumulate human capital before entering the labour market. We consider however that a share of the working population may be impacted by a skill obsolescence (particularly specific skills) due to technological changes that have not been anticipated.
We simulate two scenarios which will be compared in the long-run and correspond to stationary equilibria: (i) individuals have no access to vocational education and their human capital is fully determined by the length of standard schooling even after the technological shock; (ii) individuals are able to pursue a retraining programme to offset the depreciation of their human capital due to the technological shock.
By assuming that returns of vocational education are lower than those of standard education, we find an increase in production by 2.5% or 3.4% for a 6-months or a one-year access to vocational studies.