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Can skill diversification improve welfare in rural areas?: evidence from the rural skills development project in Bhutan

Income growth in rural Bhutan is a considerable challenge to further poverty reduction and economic development. Using a survey of rural Bhutanese households, this paper investigates the impacts of a vocational skills training program that was intended to diversify incomes outside of agriculture.

The authors clarify that the rural skills development program in Bhutan was a short-term training program that trained the rural poor in practical construction skills with the intention of raising overall incomes.

Findings contain:

  • the program had limited positive impacts along various economic and psychosocial dimensions
  • the program did raise incomes for trainees in non-competitive labour markets where trainees accounted for only a small percentage of the overall population

The paper notes that this highlights the need for program design to better assess the labour market and ensure that it does not become over saturated; otherwise, the training program may have little effect.

Conclusions are as follows:

  • having an explicit mechanism for trainees to enter the larger labour market through job placement services, and providing entrepreneurship support can further help to increase employment opportunities
  • this is particularly true in competitive labour markets where there are too many trainees in relation to the population
  • encouraging greater equality in the skill development process should be considered, but it may require providing more female-friendly training that has flexibility in training time and venues and focuses on other skill areas
  • refining the targeting of the program may help to better accelerate the speed at which it is possible to reduce poverty and vulnerability to poverty of the rural poor and increase equality in the development process