In this paper, we investigated whether an education system with an extensive VET programme, measured by the enrolment rate of students in these programmes, increases the labour market integration and the quality of jobs for young people. This relationship has been studies before, but we extend the existing literature in three ways: First, we analyse the impact of the different upper secondary VET programmes separately and also test which programmes are more effective. Second, we use a broad set of labour market outcome indicators to measure the integration of young people into the labour market and their job quality. Third, we use a broader dataset with panel data for up to 42 countries between 1998 and 2012, which allows us to clearly identify the causal inference.
In general, our results support that there is a relationship between the education system and a country’s’ situation on the youth labour market. However, our separate analysis for the impact of the share of students enrolled in school-based VET programmes and in dual VET programmes reveals that not all VET programmes have the same effect on the integration of young people into the labour market and their job quality. We can confirm that, as often shown in descriptive comparisons of national youth unemployment rates, in countries with a high share of dual VET programmes youth unemployment is significantly lower compared to countries with ex- tensive general education programmes. This correlation has also been proven in previous studies, however, most of these studies were not provide causal evidence, or only with strong exogeneity assumptions. This results indicates that education systems with an extensive dual VET programme are more successful in integrating young people into the labour market as they account for the re- quirements of the labour market. Hence, dual VET programmes provide young people with skills that are useful to firms, and as also succeed in signalling young peoples’ acquired human capital to employers. However, we find no evidence that countries with a high share of students enrolled in dual VET programmes provide better job quality for their young people if we look at the rate of temporary contracts, of atypical working hours, in-work at-risk of poverty and skills mismatch.
Regarding the extent of school-based VET programmes, which has not been neglected in other studies so far, we are not able to make final statements. We find a negative impact of the enrol- ment rate in school-based VET programmes on the integration of young people into the labour market, but without any significance. If we look at the results for the job quality of young peo- ple, the results show the opposite. This finding suggests that education systems with extensive school-based VET programmes are not more successful than general education programmes with regard to the human capital function. In contrast to dual VET programmes, school-based VET pro- grammes might not succeed in accounting for the demand of the labour market and/or signal the acquired human capital of young people to the employers. In line with these results, we also find evidence that dual VET programmes are more effective in increasing labour market integration and in improving job quality than school-based VET programmes.
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