Around the world, there is an increasing interest in expanded vocational education as a way to get youth quickly and effectively into the labor market by endowing them with occupation- specific skills. Earlier analysis of labor markets in the 1990s, however, suggested possible adverse impacts of vocational education on employment opportunities later in life due to limited adaptability to technological and structural change (Hanushek et al. (2016)). With the significant transformation of labor markets over the past two decades including such factors as globalization, digitalization, technological change, altered training programs, and reforms of social security systems, it is important to revisit the potential efficacy of expanding vocational education in today’s economic environment.
It has been argued that vocational education facilitates the school-to-work transition but reduces later adaptability to changing environments. Using the recent international PIAAC data, we confirm such a trade-off over the life-cycle in a difference-in-differences model that compares employment rates across education type and age.
Our results confirm a strong trade-off between early advantages and late disadvantages in employment for individuals with vocational education. But there is strong heterogeneity depending on the specific institutional structure of schooling and work-based training in a country. While no significant pattern is detected in the six countries without sizeable vocational systems, the declining age-employment pattern of individuals with vocational education is found across the ten countries with vocational systems, and it is strongest in countries with widely developed apprenticeship systems where industry is directly involved in education. In these apprenticeship countries, the cross-over age by which individuals with a general education have higher employment probabilities is as low as age 44.
In sum, an initial employment advantage of individuals with vocational compared to general education turns into a disadvantage later in life. Results are strongest in apprenticeship countries that provide the highest intensity of industry-based vocational education.