This paper explores the safety net aspect of the labour market incentive for the vocational education and training (VET) trained manpower in the Indian context. Generally, VET is considered to be a choice made by individuals who are looking for wages similar to or lower than that which corresponds to higher education, but with lower unemployment probability. People choose VET because of the incentive that there is a lower probability of remaining unemployed after the VET course. Using two rounds of National Sample Survey Organisation (NSSO) data, this paper explores the wage, unemployment, and status of employment of the individuals who participate in the labour market after completing VET. It has been observed that while there is a significant positive return of VET to the wages, unemployment from VET is quite high, particularly for individuals taking VET courses which correspond to lower levels of general education.

This paper also explores the institutional variables responsible for the outcome of the vocational education and training. Institutional variables as explored in the existing research are -- course duration, stratification between vocational and general education, employer participation, and ‘vocational specificity’ of the courses. This work examines another aspect of labour market structure where there is a high supply of engineers. It explores the possibility of the impact of this external factor on the labour market outcome for the VET trained manpower. Possibility of the impact of these variables on the incentive structure for the VET trained manpower is explored. This paper provides direction for future studies for exploring the impact of these variables on the labour market outcome for individuals who are pursuing formal VET.