Bryan Caplan  

Vocational Education: Do Students Suffer in the Long-Run?

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I've shown the following NBER abstract (from Hanushek, Woessmann, and Zhang) to several economists:
Policy debates about the balance of vocational and general education programs focus on the school-to-work transition. But with rapid technological change, gains in youth employment from vocational education may be offset by less adaptability and thus diminished employment later in life. To test our main hypothesis that any relative labor-market advantage of vocational education decreases with age, we employ a difference-in-differences approach that compares employment rates across different ages for people with general and vocational education. Using micro data for 18 countries from the International Adult Literacy Survey, we find strong support for the existence of such a trade-off, which is most pronounced in countries emphasizing apprenticeship programs...
All the economists who read HWZ's abstract agreed that its tone was critical of vocational education.  That's how I read it as well.  So I was surprised, even shocked, by how favorable HWZ's results for vocational education turned out to be.  The OLS results:
Most important to our purpose, while individuals with a general education are initially (normalized to an age of 16 years) 7 percentage points less likely to be employed than those with a vocational education, the gap in employment rates narrows by 2 percentage points every ten years. This implies that by age 50, on average, individuals completing a general education are more likely to be employed than individuals completing a vocational education.
Imagine sharing these facts with a 15-year-old weighing the vocational vs. the academic tracks: "If you do vocational education, you're more likely to have a job for the next 35 years.  But after that, you're less likely to have a job."  Sounds like a good trade-off, doesn't it?

More sophisticated econometrics are at least as supportive of vocational education:
[I]ndividuals completing a vocational education are more likely to be employed when young, but this employment advantage diminishes with age: as early as age 50, individuals completing a general education start to experience higher probabilities of employment. This pattern is robust to adding more control variables, dropping the youngest group in the sample, and using a matched sample.
The earnings results are less solid and less favorable, but still mixed:
For Germany and Denmark, the present value of earnings favors those with a general education. Over the lifetime, the German worker with a general education will have 24 percent higher earnings than one with a vocational education, while a Dane with general education will see six percent higher earnings. For Switzerland, however, the higher present value goes to those with vocational education; the early earnings gains more than make up for the gains in later earnings that accrue to workers with general training, and vocational workers have eight percent higher lifetime earnings.
Furthermore, these results ignore a serious possibility of unobserved differences between kids who chose vocational rather than academic education.  Most plausibly: the kids who chose vocational education would have rebelled against academic education.  They would have had lower grades, lower completion rates, and higher crime rates than the kids who self-select into the academic track.  It's more than plausible that these factors would tip the private return in favor of vocational education.

If you take signaling seriously, of course, a higher private return for vocational education would just be icing on the cake.  If the signaling model is correct, vocational education has a higher social return than academic education.  Why?  Because unlike academic education, vocational education focuses on actually raising worker productivity, not jumping through hoops to demonstrate your intelligence, conscientiousness, and conformity to the labor market.


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COMMENTS (12 to date)
Tracy W writes:

It's interesting also that they talk about a "general education" rather than an "academic education". I was under the distinct impression from my studies that there's way too much information for any one person to master during their entire lifetime, let alone high school years, so an academic education is either broad but shallow (and still missing out a lot of areas), or requires a lot of specialisation.

I have a uni degree in electrical engineering, and there's heaps I don't know about that subject, let alone chemical, civil and mechanical engineering, or physics, and those are only the most closely-allied disciplines.

Garth Zietsman writes:

If I understand it correctly there should be an IQ difference favoring academic/general education, which in turn should favor their future employment and earnings prospects. Controlling for IQ therefore should make the argument in favor of vocational education a lot stronger.

Philipe writes:

A shorter version of the paper has been published on VoxEU: http://www.voxeu.org/index.php?q=node/7300

Jeff H writes:

Isn't there a higher mortality in voc. ed.-based jobs? Couldn't that bias their results some? Still thinking about which direction... (Sorry, can't read the details of the paper right now, so this is just a first thought.)

MG writes:

Introduce a reasonable upward-sloping term structure to the discouting function and the advantage of vocational training is more pronounced. I would also look to see whether the vocationally trained are also more likley to improve their net cash flow by insourcing services hired out by the vocationally impaired. Introducing volatility (undertainty) into the analysis is often thought to increase the option-value of a "general education". However, in the last decade we have learned that technology/globalization can also displace many of the functions that the "generally educated" perform. So, the value of the employment put is questionable. Add a winner-takes-all skew to the upside value of disruption, and career call can look like just a lottery ticket. Oh, and that employment-career insurance premium cost you a ton. So, I think the onus to defend should be on those trying to force a "general education" on most kids and on those who treat all kinds of "general education" as being alike.

Floccina writes:

It would also be interesting to see if their is more variance in the incomes of the Voc or the Gen group.

collin writes:

Why not both vocational and college? I am recommending to my kids (10 & 6) to deal with this ultra-competitive market that they should both gain a vocational and college training as the best to protect yourself in today market is join a productive multi-national and become the only person to do a specific important job. I still think vocational training leaves to open for market changes.

Frankly, although there is a lot of signaling in college but students do learn a lot of (written & oral) communication skills which is really the most important skill at any business.

I surprised for how much a college professor finds college is borderline wasteful signaling. What is going to your recommendations to your children?

collin writes:

Why not both vocational and college? I am recommending to my kids (10 & 6) to deal with this ultra-competitive market that they should both gain a vocational and college training as the best to protect yourself in today market is join a productive multi-national and become the only person to do a specific important job. I still think vocational training leaves to open for market changes.

Frankly, although there is a lot of signaling in college but students do learn a lot of (written & oral) communication skills which is really the most important skill at any business.

I surprised for how much a college professor finds college is borderline wasteful signaling. What is going to your recommendations to your children?

John Roccia writes:

Something I'd want to look at as well, is that while a higher likelihood to have a job is good, the actual job (and its pay) is very relevant as well.

If group A has a thousand people, a 65% employment rate, and an average salary of 35,000/year, and group B has a thousand people, a 50% employment rate, and an average salary of 55,000 a year, which is more successful from an education policy perspective? Net value of group B is higher, but there's a higher unemployment rate as well.

Could it be that many of the vocational jobs are at least somewhat more transitory than the more academic jobs, thus hurting career-span advancement in salary? Could it even be the other way around?

Anecdotally, every mechanic I talk to who is under 40 tells me how much money they make and how they're glad they didn't go to college or perhaps even high school. Every mechanic over 50 tells me they wish they had.

What about other factors that are related to these jobs? Since being single is an expensive luxury (thanks, Bryan), which group is more likely to be married? How do you think a 15-year old would react if you told him that one career path had a lower expected lifetime earnings, but a higher chance to be married by age 25?

Also to consider - in my hometown where I went to school, there was no vocational option (small town and all). Everyone went to the same general education public school, or the one private Catholic school, which to my knowledge still focused on general academic education. There was no "shop" or "wood" class in my school. All through school, the more academically-minded kids lamented the fact that not only were some kids obviously unwilling to be there, but that their presence was actively harming the kids that DID. So the cost of forcing kids that would be better-suited to vocational school into academic education isn't paid solely by those kids, but also others' whose learning they disrupt.

Brian Clendinen writes:

Someone who understand the Swiss labor market better than me can expand on this. However, my understand is in Switzerland do the easy to of start a business but it is expensive to have workers due to required benefit payments. Therefor, a lot of Vocational personal are self employed. So the market & regulations are set-up that if you have some basic business management skills, you basically go into business for yourself and quite easily (relative to your typical small business in the West) make a good living after you build up your business. Very few expand beyond a small business because the marginal returns are so low and require a lot of extra work. I also wonder if having the highest minimum wage in the world also leads to that exception. So I think the Swiss are an exception do to their uniqueness therefor is not a great data point.

dullgeek writes:

I'm a computer programmer. It seems to me that vocational training is much bigger predictor of success in my field than formal education. This is especially true when one considers open source software - which can serve as a form of vocational training. With candidates who only participate in formal education, I get the opinions of professors as to the accomplishments of the students. With candidates who participate in open source development, I get to see their code. I get to see how they interact with the community. I get to see whether or not their code caused problems down the line. And I get to see if they were still around to fix it. I much prefer hiring programmers who have participated in an open source project - even if they don't have a degree - then those who have only a degree.

Which makes me wonder if vocational education isn't changing. I have this image of vocational training being things like working on cars, repairing HVAC units, construction, etc. And those jobs are mostly physical. But if vocational training shifts more towards knowledge work, do the conclusions still stick for performing them past the age 50?

(Of course, the image in my head may be completely wrong when it comes to which vocations count in "vocational training".)

bryan willman writes:

oddly, comp sci can be a field where theory and vocational training are well merged - at least in a good program students will be writing, debugging, changing, documenting code. especially in various big project and group project classes.

so open source history gives you a similar data point to "student got an A in compiler construction"....

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