Vocational education in the United States has come under increased scrutiny, and its proponents need the tools to convince the critics of its merits. Many economic conditions have a strong impact on vocational education, and understanding of economics is important in offering a rationale of vocational education. In a time of shrinking revenues, vocational education is important in the educational system, as it helps make workers employable, and contributes to economic efficiency. To understand the economic rationale for vocational education, one must understand economic concepts and major economic systems. There are two major systems of allocation of scarce resources, capitalism and socialism. The United States has a system of mixed capitalism. Three resources vital for production are land, capital and labor. There is currently a worsening labor shortage, and workers will need to be recruited and developed from underused sources, such as disadvantaged and disabled populations. Vocational education can play an important role in solving the labor shortage problem by anticipating employer demand. The economic rationale for vocational education would seem to be easy to demonstrate on the basis of need for trained workers and increasing international competition. Many governmental decision makers, however, are dissatisfied with vocational education. Vocational education has had to defend itself and criteria and methods have been set up to evaluate vocational education programs. Vocational education need to improve its economic value by increasing its role in economic development. Vocational education must promote itself by informing students, communities, businesses, and government of its contributions to society. (AS)