Opening doors for immigrants: The importance of occupational and workplace-based cultural skills for successful labor market entry

Young immigrants who often lack country-specific human capital face greater challenges in the transition from education to the labor market (e.g., lower employment probabilities, longer unemployment spells) than native adolescents. This paper analyzes the importance, for a successful transition, of occupational skills and workplace-based cultural skills that workers can acquire only at the work. We exploit the Swiss vocational education and training (VET) setting, in which students acquire occupational skills in one of two different types of vocational education programs: either dual programs with training in firms based on employment contracts and complemented by vocational schooling, or school-based programs without employment contracts. While well-defined curricula ensure identical occupational skills in both programs, the training of workplace-based cultural skills differs systematically. As young immigrants lack these essential workplace-related cultural skills compared to natives, we expect that additional workplace-based cultural skills training in dual VET improves immigrants' transition into the labor market and thereby their longer-term employment prospects. Using administrative data, we compare how both programs affect the labor market entry of immigrant groups with pronounced cultural disadvantages. To estimate causal effects on employment outcomes, we use differences in VET traditions across Swiss language regions as an instrument. Results show that completing dual VET leads to significantly reduced unemployment probabilities for young immigrants compared to natives in the first year after graduation, suggesting that beyond well-defined curricula for occupational skills, workplace-based cultural skills are crucial for immigrants' transitions from education into the labor market.