In this paper we argue for an enhanced market structure for PSE as an important means of adjustment of PSE to labour market changes. However, this market orientation, in our view (and other authors' opinion), can only be implemented after disentangling price mechanisms and income support in PSE and addressing potential pitfalls of this approach. The paper first briefly presents the theoretical characteristics of a market-based PSE system, then examines various dimensions of the system that could crucially impact on its feasibility. Key issues relating to these characteristics are surveyed, and some of the major concerns arising from the current Canadian system outlined. The basic question of measuring the adequacy of adjustment of the PSE system to labour market changes is also raised. The central role of students in the functioning of the PSE system – both as it is now and in a more market-oriented version – is then acknowledged. Consequently, the importance of understanding students' educational choice processes is stressed as a crucial step towards improving the PSE system's responsiveness to labour market, which should in turn lead to greater innovation and higher living standards (among other benefits). This is an "issues paper"" intended to foster discussion at a government- led roundtable and, as such, emphasizes and underscores what we see as key research issues. These questions and the broader lines of the research agenda that emerges from them are summarized at end of the paper

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