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Risk-return trade-offs to different educational paths: vocational, academic and mixed

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  • Simone N. Tuor
  • Uschi Backes-Gellner

Abstract

Purpose - The purpose of this paper is to investigate the rates of return and the risks of different types of educational paths – all leading to a tertiary educational degree. The paper seeks to distinguish a purely academic educational path from a purely vocational path and a mixed path with loops through both systems. Design/methodology/approach - The paper studies the labor market outcome to compare earnings and calculate net return rates as well as risk measures to investigate whether different educational paths are characterized by different risk-return trade-offs. Entrepreneurs are separated from employees in order to examine whether for the same combination of education the labour market outcomes differ between the two groups. Findings - The empirical results are based on the Swiss Labor Force Survey (SLFS) and demonstrate that mixed educational paths are well rewarded in the labor market. However, for entrepreneurs a high return is also associated with a high income variance. Research limitations/implications - The findings provide evidence for the existence of complementarities between vocational and academic education. Further research on mixed educational paths might provide more insight into this presumed relationship. Practical implications - Since the results indicate that mixed educational paths are a worthwhile strategy, the permeability of a national education system is a very important educational policy issue. Originality/value - The study is innovative in three ways: first, it focuses on complete educational paths and not just the highest educational degree. Second, an alternative measure, the Baldwin rate of return, is used to assess the profitability attached to different educational paths. Third, the income risk associated with each educational path is calculated.

Suggested Citation

  • Simone N. Tuor & Uschi Backes-Gellner, 2010. "Risk-return trade-offs to different educational paths: vocational, academic and mixed," International Journal of Manpower, Emerald Group Publishing, vol. 31(5), pages 495-519, August.
  • Handle: RePEc:eme:ijmpps:v:31:y:2010:i:5:p:495-519
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Jean-Marc Falter & Giovanni Ferro Luzzi & Federica Sbergami, 2011. "The Effect of Parental Background on Track Choices and Wages," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 147(II), pages 157-180, June.
    2. Glocker, Daniela & Storck, Johanna, 2014. "Risks and returns to educational fields – A financial asset approach to vocational and academic education," Economics of Education Review, Elsevier, vol. 42(C), pages 109-129.
    3. Balestra, Simone & Backes-Gellner, Uschi, 2017. "Heterogeneous returns to education over the wage distribution: Who profits the most?," Labour Economics, Elsevier, vol. 44(C), pages 89-105.
    4. Miriam Rinawi & Uschi Backes-Gellner, 2014. "Labor market transitions after layoffs: the role of occupational skills," Economics of Education Working Paper Series 0103, University of Zurich, Department of Business Administration (IBW), revised Jul 2018.
    5. Rinawi, Miriam & Backes-Gellner, Uschi, 2013. "Should I stay or should I go? - The Effect of Performance Pay on the Retention of Apprenticeship Graduates," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80024, Verein für Socialpolitik / German Economic Association.
    6. Uschi Backes-Gellner, 2014. "Benefits of Apprenticeship Training and Recent Challenges - Empirical Results and Lessons from Switzerland and Germany," Economics of Education Working Paper Series 0097, University of Zurich, Department of Business Administration (IBW).
    7. Commission of Experts for Research and Innovation (EFI), Berlin (ed.), 2012. "Research, innovation and technological performance in Germany - EFI Report 2012," Research, Innovation and Technological Performance in Germany: Report, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin, volume 127, number 2012e.

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    Keywords

    Risk management; Education;

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