Long-term labor market returns to upper secondary school track choice: Leveraging idiosyncratic variation in peers’ choices

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This study looks at the possible benefits and disadvantages of choosing a vocational rather than an academic track in upper secondary education.

While supporters of vocational education and training (VET) say it can provide a safety net for those at risk of dropping out of education or failing to enter the labour market, critics say it may push academically able students into a track which diverts them from higher-status tertiary courses.

The researchers use Danish registry data to examine how the decision to enter the vocational track affects students on the margin between the academic and vocational track and between the vocational track and leaving school.

Relative to the academic track, they find the vocational track does not lead to lower earnings or income for these students. For those who might otherwise leave school early, it offers protection from unskilled work and unemployment. For both groups it has benefits in terms of earnings, even though it is associated with jobs which have lower occupational status.

The research concludes that for these students, choosing a VET track has strong benefits and few drawbacks. However, they note that Denmark has a highly centralised wage system which means low levels of income inequality: the benefits could be less in countries with higher levels of income inequality.