Unpacking returns to vocational education in England: the role of skills, labour market sorting and mobility
Lead Research Organisation:
London School of Economics & Pol Sci
Department Name: Centre for Economic Performance
Abstract
In the UK, widespread participation in postsecondary education goes hand in hand with a relatively high number of students leaving education prematurely, ill-equipped for the labour market. This growing polarization has revived policymakers' interest in strengthening the role of vocational education as a way of improving students' labour market prospects while also relieving skills shortages across the economy.
Yet, evidence on the economic benefits of vocational education is mixed and varies depending on the alternative it is compared to. Accounting for differences in students' ability and social background, recent evidence from England by Matthewes and Ventura (2022) finds significant earnings losses for students who opt for vocational rather than academic education, with some tentative evidence that vocational education may benefit those who would instead drop out of education at the age of 16. However, due to data limitations, we still know frustratingly little of why returns to vocational education in England are lower than in other countries and whether or how this could be improved.
To answer this question, I set out to use newly available information from the Longitudinal Education Outcomes (LEO) data linked to Inter Departmental Business Register (IDBR) to study what factors drive the relationship between students' education and labour market outcomes in England, focusing on the role of skills, labour market sorting and job mobility. Focusing separately on vocational students who would have either followed an academic route or dropped out of education at age 16, I will consider the type of skills students acquire and how these determine the type of sector and firm they are employed in, as well as their ability to change job and progress in their careers.
The study will be articulated in three interdependent research objectives: the first objective will provide a descriptive overview of labour market trajectories by education, decomposing earnings growth into separate between- and within-job components before exploring the role of selective sorting across sectors and firms. The second objective will study the effect of enrolling in vocational education on skills, sector of employment and mobility for students whose alternative is academic education, using students' distance to post-16 education institutions as an independent source of variation in their education choices. Finally, under the third objective, I will consider whether the 2013 increase in education participation age to 17 prodded students into vocational courses and whether this led them to acquire more technical or social skills, allowing them to find employment in better-paid sectors or firms.
Overall, my proposed research has the ambition to improve our still imperfect understanding of the economic returns to vocational education by combining novel and rigorous empirical evidence from England with an emphasis on the interaction between skills and labour market structures. In so doing, the research will get to the heart of the ongoing debate on education policy in the UK, shedding light on the country's skills strategy. This research will inform British policymakers reform efforts, ensuring the post-16 education offer is well-aligned with the skills needed to succeed in the UK labour market of the 21st century, thus benefiting future generations of students and workers.
Yet, evidence on the economic benefits of vocational education is mixed and varies depending on the alternative it is compared to. Accounting for differences in students' ability and social background, recent evidence from England by Matthewes and Ventura (2022) finds significant earnings losses for students who opt for vocational rather than academic education, with some tentative evidence that vocational education may benefit those who would instead drop out of education at the age of 16. However, due to data limitations, we still know frustratingly little of why returns to vocational education in England are lower than in other countries and whether or how this could be improved.
To answer this question, I set out to use newly available information from the Longitudinal Education Outcomes (LEO) data linked to Inter Departmental Business Register (IDBR) to study what factors drive the relationship between students' education and labour market outcomes in England, focusing on the role of skills, labour market sorting and job mobility. Focusing separately on vocational students who would have either followed an academic route or dropped out of education at age 16, I will consider the type of skills students acquire and how these determine the type of sector and firm they are employed in, as well as their ability to change job and progress in their careers.
The study will be articulated in three interdependent research objectives: the first objective will provide a descriptive overview of labour market trajectories by education, decomposing earnings growth into separate between- and within-job components before exploring the role of selective sorting across sectors and firms. The second objective will study the effect of enrolling in vocational education on skills, sector of employment and mobility for students whose alternative is academic education, using students' distance to post-16 education institutions as an independent source of variation in their education choices. Finally, under the third objective, I will consider whether the 2013 increase in education participation age to 17 prodded students into vocational courses and whether this led them to acquire more technical or social skills, allowing them to find employment in better-paid sectors or firms.
Overall, my proposed research has the ambition to improve our still imperfect understanding of the economic returns to vocational education by combining novel and rigorous empirical evidence from England with an emphasis on the interaction between skills and labour market structures. In so doing, the research will get to the heart of the ongoing debate on education policy in the UK, shedding light on the country's skills strategy. This research will inform British policymakers reform efforts, ensuring the post-16 education offer is well-aligned with the skills needed to succeed in the UK labour market of the 21st century, thus benefiting future generations of students and workers.
