Quadratic Indirect Effect of National TVET Expenditure on Economic Growth Through Social Inclusion Indicators

Abstract

The recent movement of social-investment state encouraged national educational initiatives taken by the policy makers of developed countries to enhance individual’s social inclusion for national economic gains. Benefiting from human capital theory, the author has reexamined the indirect effect of nation expenditure of technical and vocational education and training (TVET) on economic growth through social inclusion by isolating the effective key social inclusion dimensions (employment, earnings, and multidimensional poverty) from each other. A 15-year data set, ranging from 2000 to 2014, collected from Organisation for Economic Co-operation and Development (OECD) database of 21 OECD member European countries was used for hypotheses testing. The statistical results obtained through the quadratic indirect effects demonstrate clear support for the entire hypotheses. However, the results demonstrate that the indirect effects decrease as the values of TVET expenditure increases, particularly, when the indirect effect is investigated through the wages or when the overall index value of social inclusion indicators is introduced as a mediator. The study offers some implications for the researchers and the policy makers who are interested in determining the overall effectiveness of human capital development initiatives in the welfare-state/social-investment states.