The Payoff to Vocational Qualifications: Reconciling Estimates from Survey and Administrative Data

This paper takes as a starting point the wage/earnings differentials associated with vocational qualifications that have been estimated in the literature. Two distinct parts of that literature are identified, using survey and administrative data respectively. We describe the results of example papers of each type, and show how they have produced different estimates of the differentials, particularly for lower level qualifications. We then discuss the various differences in equation specification that have typically been estimated by users of the two types of data. We replicate existing results in our own analysis of the two data sources, and then show how the estimated differentials change when the specifications are changed, step-by-step, to more closely resemble each other. The results show that when estimated on the same specification, survey and administrative data produce estimated earnings differentials that follow the same pattern in terms of relative size across qualifications, and that for most qualifications are similar in absolute size. There does not seem to be one particular specification difference that was driving the differing results in the literature, with some specification changes being more important for some qualifications, but less so for others.