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The value of vocational education : high school type and labor market outcomes in Indonesia

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  • Newhouse, David
  • Suryadarma, Daniel

Abstract

This paper examines the relationship between the type of senior high school attended by Indonesian youth and their subsequent labor market outcomes. This topic is very timely, given the government’s recent decision to dramatically expand vocational enrollment. The analysis controls for an unusually rich set of predetermined characteristics, and exploits longitudinal data spanning 14 years to separately identify cohort and age effects. There are four main findings. First, students are sorted into different school types largely on the basis of their entering exam score. Public schools attract the highest-scoring students, while private vocational schools serve the lowest-scoring students. Second, after controlling for a variety of characteristics, including test scores, male public school graduates earn a substantial premium over their privately schooled counterparts. Third, private vocational school graduates fare at least as well as private general graduates, despite coming from more disadvantaged socioeconomic backgrounds. Finally, the returns to public vocational education have declined sharply for the most recent cohort of men. This raises important concerns about the current expansion of public vocational education, and the relevance of the male vocational curriculum in an increasingly service-oriented economy.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5035.

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Date of creation: 01 Sep 2009
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Handle: RePEc:wbk:wbrwps:5035

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Keywords: Tertiary Education; Secondary Education; Education For All; Labor Markets; Teaching and Learning;

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References

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  1. Wooldridge, Jeffrey M. & Imbens, Guido, 2009. "Recent Developments in the Econometrics of Program Evaluation," Scholarly Articles 3043416, Harvard University Department of Economics.
  2. Ofer Malamud & Cristian Pop-Eleches, 2008. "General Education vs. Vocational Training: Evidence from an Economy in Transition," Working Papers 0807, Harris School of Public Policy Studies, University of Chicago.
  3. Godius Kahyarara & Francis Teal, 2008. "The returns to vocational training and academic education: Evidence from Tanzania," CSAE Working Paper Series 2008-07, Centre for the Study of African Economies, University of Oxford.
  4. Tobias, J.L., 2000. "Are Return to Schooling Concentrated Among the Most Able? A Semiparametric Analysis of the Ability-Earnings Relationship," Papers 00-01-12, California Irvine - School of Social Sciences.
  5. Esther Duflo, 2000. "Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment," NBER Working Papers 7860, National Bureau of Economic Research, Inc.
  6. Moenjak, Thammarak & Worswick, Christopher, 2003. "Vocational education in Thailand: a study of choice and returns," Economics of Education Review, Elsevier, vol. 22(1), pages 99-107, February.
  7. David Newhouse & Kathleen Beegle, 2006. "The Effect of School Type on Academic Achievement: Evidence from Indonesia," Journal of Human Resources, University of Wisconsin Press, vol. 41(3).
  8. Neuman, Shoshana & Ziderman, Adrian, 1991. "Vocational schooling, occupational matching, and labor market earnings in Israel," Policy Research Working Paper Series 683, The World Bank.
  9. Lechner, Michael, 1996. "An Evaluation of Public Sector Sponsored Continuous Vocational Training Programs in East Germany," Discussion Papers 539, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
  10. James Heckman & Edward Vytlacil, 2000. "Identifying the Role of Cognitive Ability in Explaining the Level of and Change in the Return to Schooling," NBER Working Papers 7820, National Bureau of Economic Research, Inc.
  11. Paul Bennell, 1996. "General versus vocational secondary education in developing countries: A review of the rates of return evidence," Journal of Development Studies, Taylor & Francis Journals, vol. 33(2), pages 230-247.
  12. Shoshana Neuman & Adrian Ziderman, 1991. "Vocational Schooling, Occupational Matching, and Labor Market Earnings in Israel," Journal of Human Resources, University of Wisconsin Press, vol. 26(2), pages 256-281.
  13. Francis Teal & Godius Kahyarara, 2008. "The returns to vocational training and academic education: Evidence from Tanzania," Economics Series Working Papers WPS/2008-07, University of Oxford, Department of Economics.
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Cited by:
  1. World Bank, 2010. "Education, Training and Labor Market Outcomes for Youth in Indonesia," World Bank Other Operational Studies 2914, The World Bank.
  2. Pugatch, Todd, 2012. "Safety Valve or Sinkhole? Vocational Schooling in South Africa," IZA Discussion Papers 7015, Institute for the Study of Labor (IZA).
  3. Cho, Yoonyoung & Kalomba, Davie & Mobarak, Ahmed Mushfiq & Orozco, Victor, 2013. "Gender differences in the effects of vocational training : constraints on women and drop-out behavior," Policy Research Working Paper Series 6545, The World Bank.
  4. Eichhorst, Werner & Rodríguez-Planas, Núria & Schmidl, Ricarda & Zimmermann, Klaus F., 2012. "A Roadmap to Vocational Education and Training Systems Around the World," IZA Discussion Papers 7110, Institute for the Study of Labor (IZA).
  5. Monazza Aslam & Shenila Rawal, 2013. "Preparing Women of Substance? Education, Training, and Labor Market Outcomes for Women in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 18(Special E), pages 93-128, September.

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