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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 Limited, vol. 31(5), pages 495-519, August.
    • Handle: RePEc:eme:ijmpps:v:31:y:2010:i:5:p:495-519
    DOI: 10.1108/01437721011066335
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    Cited by:

    1. Uschi Backes-Gellner & Patrick Lehnert, 2022. "Apprenticeships," Economics of Education Working Paper Series 0194, University of Zurich, Department of Business Administration (IBW).
    2. 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.
    3. Miriam Rinawi & Uschi Backes-Gellner, 2021. "Labour market transitions after layoffs: the role of occupational skills," Oxford Economic Papers, Oxford University Press, vol. 73(1), pages 76-97.
    4. Miriam Rinawi & Uschi Backes-Gellner, 2020. "Firms’ method of pay and the retention of apprentices," Oxford Economic Papers, Oxford University Press, vol. 72(1), pages 269-291.
    5. Schäfer Andrea & Gottschall Karin, 2016. "Zahlt sich Akademisierung aus?: Geschlechtsspezifische Lohnniveaus und Erträge von höherer Bildung in Pflege- und ärztlichen Berufen," Arbeit, De Gruyter, vol. 25(3-4), pages 125-145, December.
    6. Aurelien Abrassart & Stefan C. Wolter, 2019. "Investigating the image deficit of VET: occupational prestige ranking depending on the educational requirements and the skill content of occupations," Economics of Education Working Paper Series 0168, University of Zurich, Department of Business Administration (IBW).
    7. Maria Esther Oswald-Egg & Ursula Renold, 2019. "No Experience, No Employment: The Effect of Vocational Education and Training Work Experience on Labour Market Outcomes after Higher Education," KOF Working papers 19-469, KOF Swiss Economic Institute, ETH Zurich.
    8. Fabian Sander & Irene Kriesi, 2019. "Medium and Long-Term Returns to Professional Education in Switzerland: Explaining Differences between Occupational Fields," Social Inclusion, Cogitatio Press, vol. 7(3), pages 136-153.
    9. 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.
    10. 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).
    11. 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.
    12. Daniel J. Henderson & Anne-Charlotte Souto & Le Wang, 2020. "Higher-Order Risk–Returns to Education," JRFM, MDPI, vol. 13(11), pages 1-25, October.
    13. Uschi Backes-Gellner, 2021. "Insights into the Economic Benefits of VPET for Individuals: Theoretical and Empirical Results for Researchers and Practitioners," Economics of Education Working Paper Series 0180, University of Zurich, Department of Business Administration (IBW).
    14. Oswald-Egg, Maria Esther & Renold, Ursula, 2021. "No experience, no employment: The effect of vocational education and training work experience on labour market outcomes after higher education," Economics of Education Review, Elsevier, vol. 80(C).
    15. EFI - Commission of Experts for Research and Innovation (ed.), 2012. "Research, innovation and technological performance in Germany - EFI Report 2012," Reports on Research, Innovation and Technological Performance in Germany, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin, volume 127, number 2012e, March.

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