Vocational Education: Do Students Suffer in the Long-Run?
By Bryan Caplan
Policy debates about the balance of vocational and general education
programs focus on the school-to-work transition. But with rapid
technological change, gains in youth employment from vocational
education may be offset by less adaptability and thus diminished
employment later in life. To test our main hypothesis that any relative
labor-market advantage of vocational education decreases with age, we
employ a difference-in-differences approach that compares employment
rates across different ages for people with general and vocational
education. Using micro data for 18 countries from the International
Adult Literacy Survey, we find strong support for the existence of such a
trade-off, which is most pronounced in countries emphasizing
All the economists who read HWZ’s abstract agreed that its tone was critical of vocational education. That’s how I read it as well. So I was surprised, even shocked, by how favorable HWZ’s results for vocational education turned out to be. The OLS results:
Most important to our purpose, while individuals with a general education are initially (normalized to an age of 16 years) 7 percentage points less likely to be employed than those with a vocational education, the gap in employment rates narrows by 2 percentage points every ten years. This implies that by age 50, on average, individuals completing a general education are more likely to be employed than individuals completing a vocational education.
Imagine sharing these facts with a 15-year-old weighing the vocational vs. the academic tracks: “If you do vocational education, you’re more likely to have a job for the next 35 years. But after that, you’re less likely to have a job.” Sounds like a good trade-off, doesn’t it?
More sophisticated econometrics are at least as supportive of vocational education:
[I]ndividuals completing a vocational education are more likely to be employed when young, but this employment advantage diminishes with age: as early as age 50, individuals completing a general education start to experience higher probabilities of employment. This pattern is robust to adding more control variables, dropping the youngest group in the sample, and using a matched sample.
The earnings results are less solid and less favorable, but still mixed:
For Germany and Denmark, the present value of earnings favors those with a general education. Over the lifetime, the German worker with a general education will have 24 percent higher earnings than one with a vocational education, while a Dane with general education will see six percent higher earnings. For Switzerland, however, the higher present value goes to those with vocational education; the early earnings gains more than make up for the gains in later earnings that accrue to workers with general training, and vocational workers have eight percent higher lifetime earnings.
Furthermore, these results ignore a serious possibility of unobserved differences between kids who chose vocational rather than academic education. Most plausibly: the kids who chose vocational education would have rebelled against academic education. They would have had lower grades, lower completion rates, and higher crime rates than the kids who self-select into the academic track. It’s more than plausible that these factors would tip the private return in favor of vocational education.
If you take signaling seriously, of course, a higher private return for vocational education would just be icing on the cake. If the signaling model is correct, vocational education has a higher social return than academic education. Why? Because unlike academic education, vocational education focuses on actually raising worker productivity, not jumping through hoops to demonstrate your intelligence, conscientiousness, and conformity to the labor market.