Academic Literature

VET or Academic Education and Labour Market Outcomes – Only at the upper secondary or post-secondary level does vocational education perform slightly better than academic education

Vocational education and training (VET) are highly valued by many. For instance, 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 <10%; (b) increase the share of 30–40 years old having completed tertiary or equivalent education to at least 40%.

In this paper 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 consider the 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.

Our key assumption is that, after controlling for individual differences in parental education, country of birth and the number of books in the house, the assignment of individuals to these treatments can be considered as good as random. This assumption implies that our selection on observables is capable of controlling for the sources of self-selection into educational tracks. We discuss its plausibility in the context of the data being used. This is important for the interpretation of our results.

We have shown that vocational education does not perform as well as academic education both in labour market outcomes and in the level of basic skills, including literacy and numeracy. This is especially true for higher education. Only at the upper secondary or post-secondary level does vocational education perform slightly better than academic education in the probability of being currently employed as well as in the time spent in paid employment, although the differences we find are small.

Should then vocational education be reduced in favour of more academic curricula?

One might say that the answer is partially provided by the recent evolution of vocational curricula in many countries, which are characterized by increasing emphasis on more academic education. Our own view is more nuanced.

First of all, this paper provides substantial information on the benefits of vocational and academic education, but has very little to say on costs. Yet, individual decisions to undertake vocational or academic education depend both on benefits and on costs. Although academic education provides higher earnings, higher skills proficiency and better non-monetary outcomes, it could also have higher costs for some individuals, who may find that a vocational curriculum, if available, is privately optimum.

Beside direct and opportunity costs, an important component of the private cost of education is the disutility of the effort required to complete it, which depends on several factors, including the composition of the ability portfolio an individual is endowed with. On the one hand, individuals with higher cognitive ability, who often come from better educated families and environments, are advantaged in acquiring academic education and are likely to have a lower cost of effort when engaging in this type of education. On the other hand, individuals with a higher propensity to perform manual activities and with higher dexterity, possibly coming from a less privileged environment, may find it less costly to complete a vocational curriculum.

When both benefits and costs are taken into account, vocational education can be for many the education choice that provides the highest net expected benefit. The availability of this track is also an opportunity that keeps some individuals in school, and reduces the risk of early school leaving.

There is scope for public intervention when the assignment of individuals to different ability levels is determined at least in part by parental background, especially when this background operates as a constraint that precludes choices. Carneiro and Heckman propose the distinction between short-term and long-term constraints to educational choice, with the former due to lack of economic resources and the latter induced by disadvantaged parental education. When the choice between vocational and academic education is affected by the presence of long-term constraints, public intervention may be desirable early on in an individual life, so as to compensate differences in the environment that affect the development of cognitive and non-cognitive abilities.

There may also be externalities at work. Our own evidence suggests that individuals with a more academic education are more likely to engage in voluntary activities and to trust others. These activities spill-over positively on others and on society at large, but the associated benefits are often ignored by singles when deciding which type of educational curriculum to pursue. The presence of these positive externalities suggests that the degree of investment in academic education could be “too low”.

Although the presence of long term liquidity constraints and of positive externalities associated to academic education may suggest that the degree of investment in this type of education is lower than the social optimum, we do not recommend that vocational education should be drastically reduced or even eliminated from upper secondary curricula. This is because individuals may differ in their portfolio of skills (practical vs academic) even after the differences in long term constraints have been taken care of. If this is the case, the availability of the vocational option may reduce early school leaving by keeping more practically oriented individuals in school.

Rather the cutting back on vocational studies, perhaps a more promising policy avenue is that of making vocational education as effective as possible, by increasing its expected benefits. Will the recent evolution of education policy promoted by the EU, which includes the emphasis on facilitating transitions between vocational and academic tracks, a higher flexibility in the design of curricula and the promotion of a better integration between vocational education at school and training at work, help in this direction? In our empirical research we have asked whether the labour market outcomes associated to vocational education are more favourable in the countries where the combination of school and work programs is more advanced. However, we have found no systematic evidence that this is the case.

Chosen excerpts by Job Market Monitor. Read the whole story @ The effects of vocational education on adult skills, employment and wages: What can we learn from PIAAC? | SpringerLink

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