| Abstract: |
Vocational education and training are highly valued by many. The European
Ministers for Vocational Education and Training, the European Social Partners
and the European Commission have issued in 2010 the Bruges Communiqué, which
describes the global vision for VET in Europe 2020. In this vision, vocational
skills and competencies are considered as important as academic skills and
competencies. VET is expected to play an important role in achieving two
Europe 2020 headline targets set in the education field: a) reduce the rate of
early school leavers from education to less than 10 percent; b) increase the
share of 30 to 40 years old having completed tertiary or equivalent education
to at least 40 percent. However, there is limited hard evidence that VET can
improve education and labour market outcomes. The few existing studies yield
mixed results partly due to differences in the structure and quality of VET
across countries. In this report we investigate the effects of VET on adult
skills and labour market outcomes by using the PIAAC survey. Data
comparability across countries, the breath of countries involved, and the
almost unique presence of information on assessed skills, training, earnings
and employment makes this survey especially valuable to study the different
facets of VET as compared to more academic education. Our approach is to think
of the possible education careers available to individuals as alternative
treatments in a multivalued treatment framework. Focusing mainly but not
exclusively on upper secondary, post-secondary and tertiary education, we
assume that individuals are exposed to four alternative treatments: 1.
vocational education at the upper secondary or post-secondary level; 2.
academic education at the upper secondary or post-secondary level; 3.
vocational education at the tertiary level; 4. academic education at the
tertiary level. In most of this paper, comparisons between vocational and
academic education are made at the same level of educational attainment, hence
outcomes of treatment 1 (3) are compared to those of treatment 2 (4).
Depending on the research question being investigated, other comparisons are
possible and may deliver a different picture than the one presented here.
Isolating the effect of VET courses is difficult in the absence of students’
ability at the time of entry. In this paper, we assume that the assignment of
individuals to the treatments listed above is explained by parental education,
country of birth, the number of books in the house at age 16 as well as the
pupil/teacher ratio in primary school and the proportion of residents in rural
areas at the age of selection. We discuss in the report how plausible this
assumption is in the context of the data being used. This is important for the
interpretation of our results. Only if this assumption holds we can treat our
estimates of the effects of alternative treatments as causal effects. If it
does not, a more modest interpretation is in order that views our findings as
interesting correlations at best. In particular, if there are factors
affecting selection into different curricula that we cannot control for with
the data at hand, our estimates may still be affected by selection bias, which
could amplify the estimate gap in labour market outcomes associated to
alternative curricula. The results are encouraging in some ways while
disappointing in others. Overall, at the ISCED 3 and 4 level, we find that VET
performs about as well as academic education as far as earnings are concerned
and a bit better in terms of employment outcomes. VET at the ISCED 3-4 level
is also associated with higher training incidence. Finally, our findings
support the view that the presence of vocational tracks helps keeping students
with limited academic attitudes in school. On the other hand and despite the
emphasis put on creating and/or expanding VET opportunities at the ISCED 5
level, we find a clear advantage of academic education at this level across
all outcomes considered. Unsurprisingly, there are large cross-country
differences in the estimates reported above, most likely explained by
differences in the quality of VET instructions. For instance, there is
evidence that the wage and employment returns to VET are higher in countries
where the relative supply of VET graduates is lower. In these countries, skill
performance by VET graduates is also better. However, in spite of the growing
interest attracted by dual systems, which alternate school and work, we do not
find systematic evidence that returns to VET are higher in the countries where
vocational education systematically combines school and work. More
specifically, at the ISCED 3-4 level, a vocational curriculum is associated to
only slightly lower hourly earnings but a higher probability of being
currently employed, and a higher share of the completed working life spent in
paid employment. The estimated differences are small: for earnings, the
negative gap ranges between -1.3 percent for males and -4.8 percent for
females; for the probability of employment and the share of time spent in paid
employment, the estimated positive gaps are 2.2 and 3.3 percentage points for
males and 1.9 and 0.6 percentage points for females. On the other hand, the
comparison between vocational and academic education is much more
disappointing when we consider tertiary education (ISCED 5). In this case, the
earnings gap between vocational and academic education at the time of the
interview is as big as -19 percent for males and -21.7 percent for females.
There is also a small negative gap in the probability of being currently
employed. This gap should however be contrasted with the positive gap in the
share of the working life spent in paid jobs, estimated at 6.9 percentage
points in the case of males and at 3.7 percentage points in the case of
females. Overall, the evidence we have on different ISCED levels suggests that
vocational education does not perform as well as academic education when
earnings are concerned, and performs slightly better than academic education
when employability measures are considered. VET also performs less well than
academic education on a number of other non-monetary outcomes. Independently
of the ISCED level, we find that individuals with vocational education have a
higher likelihood of being NEET (not employed and with no education or
training in the past 12 months), report poorer health and have poorer civic
behaviour than comparable individuals with academic education. There is also
evidence that vocational education is associated to poorer labour market
returns among older than younger cohorts. Whether these differences simply
reflect cohort effects or also indicate the presence of age effects is
impossible to tell with the data at hand, which are a cross section of
individuals. This issue is important but must be left to better data and
further research. When we consider the proficiency in foundation skills we
find individuals with vocational education to be less proficient than those
with academic education, for any ISCED level. This is true for both genders
and, in spite of some heterogeneity, for all countries. The negative gap is
larger for those with tertiary education and increases with the
country-specific share of vocational students. In particular, we estimate that
the negative percentage gap associated to vocational education at the
secondary or post-secondary level ranges from -2.0 to -2.2 percent for
literacy, from -1.9 to -2.9 percent for numeracy and from -1.8 to -2.3 for
problem solving skills. In the case of tertiary education, the negative gap is
larger and ranges from -5.7 to -5.9 for literacy, from -6.7 to -7 percent for
numeracy and from -4.4 to -4.7 percent for problem solving skills. We also
find that the relationship between initial vocational education and training
and continuing vocational education and training varies with the level of
education. When we consider upper secondary or post-secondary education, there
is evidence that VET is associated with higher training incidence. The
estimated positive gap with respect to academic education ranges from 2.4
percentage points for females to 4.0 percentage points for males. When we
focus instead on tertiary education, the evidence suggests that those who have
completed vocational curricula have on average a much lower investment in
further training than those with an academic curriculum. In this case, the
estimated negative gap is close to 10 percentage points. These results hold
for both genders, even when we distinguish between on-the-job and off-the-job
training. Interestingly, the negative effect of a vocational curriculum is
larger in absolute value in countries with higher employment protection.
Finally, we compare the labour market outcomes and the current skills of
individuals who have completed upper secondary or post-secondary vocational
education and individuals who have completed at most lower secondary education
(ISCED 2). It is often said that the presence of vocational tracks helps
keeping students with limited academic attitudes in school. Our empirical
evidence shows that upper secondary VET is associated to substantially higher
hourly earnings, employability and skills with respect to lower education. For
males, we estimate an hourly earnings premium of 10.3 percent and an
employment premium of 11.9 percentage points. VET graduates also enjoy close
to 11 percent higher level of measured numeracy skills with respect to
comparable individuals with at most lower secondary education. In spite of
spending more time at school than the latter, the former also end up spending
a higher percentage of time in paid employment. |