Bridging the Skills Gap: The Role of Vocational Education and Training in Shaping Youth Employment in Sri Lanka

Youth unemployment is a major political issue in many countries, including Sri Lanka, where unemployment among young is pervasive.Vocational education and training (VET) has been identified as an effective solution to match between the labor demand and supply.Using a fuzzy regression discontinuity design (FRDD), we examine the effectiveness of VET on youth employment in Sri Lanka.We find that VET improves short-term employment outcomes, but has limited impacts on permanent contracts, career advancement, and wage progression.The economic crisis further exacerbated employment insecurity, leading to a higher job turnover and shift toward self-employment.The heterogeneity analysis across VET courses reveals that those impacts are not uniform, and graduates in selected courses tend to gain more.Our findings underscore the importance of stronger industry linkages, enhanced job security measures, and tailored VET curricula to ensure sustained labor market integration and long-term career progression for vocational graduates in Sri Lanka.