Encouraging skill development: Evidence from public-private partnerships in education in Russia's regions.

How and when are governments able to encourage firms and schools to work together to develop workers' skills? Upgrading the quality of human capital in the workforce is widely seen as a key challenge faced by countries looking to escape the "middle income trap." Growing attention has been paid to public-private partnerships (PPP) between individual firms and schools as a powerful tool for meeting this challenge, but key facilitators of PPP thought crucial in existing studies – strong, independent employers' associations and labor unions – are often missing in such settings. To explore the emergence of PPP in skill development in the developing world, we draw on recent reform experiences in Russia's regions that have led to a surge in complex, costly forms of PPP despite weakly developed business associations and unions. We argue that variation in the administrative capacity of regional governments and their political accountability explains this surge. Strong administrative capacity reassures all parties that regional authorities can monitor their counterparties' compliance with agreements, while political accountability creates incentives for authorities to do so. We test our argument using original data on the existence and content of firm-school partnerships across all Russia's regions for 2013. • Costly School-firm cooperation to develop skill depends on credible commitment. • The state can forge commitment if actors' believe it has the ability and incentives. • Strong administrative capacity signals the ability to enforce agreements. • Businesses' access to formal institutions aligns the state's incentives. • Data on firm-school cooperation in Russia support both arguments. [ABSTRACT FROM AUTHOR]