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On Track to Success? Returns to Vocational Education Against Different Alternatives

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  • Sönke Hendrik Matthewes

    (University of Potsdam, Berlin School of Economics, London School of Economics)

  • Guglielmo Ventura

    (London School of Economics, University College London)

Abstract

Many countries consider expanding vocational curricula in secondary education to boost skills and labour market outcomes among non-university-bound students. However, critics fear this could divert other students from more profitable academic education. We study labour market returns to vocational education in England, where until recently students chose between a vocational track, an academic track and quitting education at age 16. Identification is challenging because self-selection is strong and because students’ next-best alternatives are unknown. Against this back- drop, we leverage multiple instrumental variables to estimate margin-specific treatment effects, i.e., causal returns to vocational education for students at the margin with academic education and, separately, for students at the margin with quitting education. Identification comes from variation in distance to the nearest vocational provider conditional on distance to the nearest academic provider (and vice-versa), while controlling for granular student, school and neighbourhood characteristics. The analysis is based on population-wide administrative education data linked to tax records. We find that the vast majority of marginal vocational students are indifferent be- tween vocational and academic education. For them, vocational enrolment substantially decreases earnings at age 30. This earnings penalty grows with age and is due to wages, not employment. However, consistent with comparative advantage, the penalty is smaller for students with higher revealed preferences for the vocational track. For the few students at the margin with no further education, we find merely tentative evidence of increased employment and earnings from vocational enrolment.

Suggested Citation

  • 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.
  • Handle: RePEc:pot:cepadp:58
    DOI: 10.25932/publishup-56725
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    More about this item

    Keywords

    vocational education; returns to education; multi-valued treatment; instrumental variables;
    All these keywords.

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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