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Labor Market Returns to Vocational Secondary Education

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  • Mikko Silliman
  • Hanna Virtanen

Abstract

We study labor market returns to vocational versus general secondary education using a regression discontinuity design created by the centralized admissions process in Finland. Admission to the vocational track increases initial annual income, and this benefit persists at least through the mid-thirties, and present discount value calculations suggest that it is unlikely that life cycle returns will turn negative through retirement. Moreover, admission to the vocational track does not increase the likelihood of working in jobs at risk of replacement by automation or offshoring. Consistent with comparative advantage, we observe larger returns for people who express a preference for vocational education.

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  • Mikko Silliman & Hanna Virtanen, 2022. "Labor Market Returns to Vocational Secondary Education," American Economic Journal: Applied Economics, American Economic Association, vol. 14(1), pages 197-224, January.
  • Handle: RePEc:aea:aejapp:v:14:y:2022:i:1:p:197-224
    DOI: 10.1257/app.20190782
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    Cited by:

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    2. Hanna Virtanen & Mikko Silliman & Tiina Kuuppelomäki & Kristiina Huttunen, "undated". "Education, Gender, and Family Formation," Working Papers 340, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    3. Dai, Li & Martins, Pedro S., 2024. "Does Vocational Education Pay off in China? Evidence from City-Level Education Supply Shocks," IZA Discussion Papers 16957, Institute of Labor Economics (IZA).
    4. Wongmonta, Sasiwooth, 2023. "Revisiting the wage effects of vocational education and training (VET) over the life cycle: The case of Thailand," International Journal of Educational Development, Elsevier, vol. 103(C).
    5. Stenberg, Anders & Tudor, Simona, 2023. "Field of Study and Mental Health in Adulthood," IZA Discussion Papers 16701, Institute of Labor Economics (IZA).
    6. Didier Nibbering & Matthijs Oosterveen, 2023. "Instrument-based estimation of full treatment effects with movers," Papers 2306.07018, arXiv.org.
    7. N. Luotonen & V. Puttonen & E. Rantapuska, 2022. "Ability, Educational Attainment, and Household Financial Distress," Journal of Consumer Policy, Springer, vol. 45(4), pages 655-672, December.
    8. Christina Langer & Simon Wiederhold, 2023. "The Value of Early-Career Skills," Working Papers 222, Bavarian Graduate Program in Economics (BGPE).
    9. Ollikainen, Jani-Petteri & Pekkarinen, Tuomas & Uusitalo, Roope & Virtanen, Hanna, 2022. "Effect of Secondary Education on Cognitive and Non-cognitive Skills," IZA Discussion Papers 15318, Institute of Labor Economics (IZA).
    10. Chen, Ji & Wu, Liudan & Hao, Lili & Yu, Xiao & Streimikiene, Dalia, 2024. "Does the import of green products encourage green technology innovation? Empirical evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    11. Jani-Petteri Olllikainen & Tuomas Pekkarinen & Roope Uusitalo & Hanna Virtanen, "undated". "Effect of Secondary Education on Cognitive and Non-cognitive Skills," Working Papers 336, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    12. Sönke Hendrik Matthewes & Guglielmo Ventura, 2022. "On Track to Success? Returns to Vocational Education Against Different Alternatives," CEPA Discussion Papers 58, Center for Economic Policy Analysis.
    13. Sönke Hendrik Matthewes & Guglielmo Ventura, 2022. "On Track to Success? Returns to vocational education against different alternatives," CVER Research Papers 038, Centre for Vocational Education Research.
    14. Chowdhury, Shyamal & Hasan, Syed & Sharma, Uttam, 2024. "The Role of Trainee Selection in the Effectiveness of Vocational Training: Evidence from a Randomized Controlled Trial in Nepal," IZA Discussion Papers 16705, Institute of Labor Economics (IZA).
    15. Anton B Andersson & Carlo Barone & Martin Hällsten, 2023. "Are upper-secondary track decisions risky? Evidence from Sweden on the assumptions of risk-aversion models," Rationality and Society, , vol. 35(3), pages 311-337, August.
    16. Dai, Li & Martins, Pedro S., 2024. "The Wage Effects of Polytechnic Degrees: Evidence from the 1999 China Higher Education Expansion," GLO Discussion Paper Series 1399, Global Labor Organization (GLO).
    17. Kemper, Johanna & Renold, Ursula, 2024. "Evaluating the impact of general versus vocational education on labor market outcomes in Egypt by means of a regression discontinuity design," Journal of Development Economics, Elsevier, vol. 166(C).
    18. Huttunen, Kristiina & Pekkarinen, Tuomas & Uusitalo, Roope & Virtanen, Hanna, 2023. "Lost boys? Secondary education and crime," Journal of Public Economics, Elsevier, vol. 218(C).

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    More about this item

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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