Estimating the Employment and Educational Effects of Vocational Training: the Role of School Quality

This paper provides new evidence of the short and long-run effects of vocational training (VT) on labor market and educational outcomes, with a particular interest in how school quality may confound estimates. VT schools may differ from regular schools not only in terms of type of training, but also in the availability of resources. We take advantage of a particular institutional arrangement in the state of Paraná, Brazil, where a single private institution named FIEP provides both VT and regular education under two separate but closely related entities, while non-FIEP institutions provide regular education. As both VT and regular schools within FIEP have more resources and better inputs than non-FIEP schools, simply comparing outcomes of VT and regular students can be misleading even if students were assigned randomly to schools. Using a unique survey applied to different cohorts of high school graduates, we show that quality plays an important but nuanced role when comparing the effects of general and VT in the short and long run. In particular, our propensity score estimates indicate that FIEP VT graduates have higher short-run employability than both FIEP and non-FIEP non-VT students. However, non-VT graduates from the better-funded FIEP system are more likely to continue to higher education, so that the short-run employment effect all but dissipates as they enter the labor force in the long-run.