Labor market returns to college education with vocational qualifications

In a context of demographic change, European governments seek ways to keep the skill set of the labor force flexible. One option to achieve this goal is widening access to college education to non-traditional students, such as those vocationally trained. Assessing whether this is a promising approach, I investigate what kind of labor market returns German non-traditional students can expect after enrolling in college rather than continuing with a vocational training-based career. Relying on the Adult Cohort of the National Educational Panel Study I use propensity score-adjusted...  [+] Show more

In a context of demographic change, European governments seek ways to keep the skill set of the labor force flexible. One option to achieve this goal is widening access to college education to non-traditional students, such as those vocationally trained. Assessing whether this is a promising approach, I investigate what kind of labor market returns German non-traditional students can expect after enrolling in college rather than continuing with a vocational training-based career. Relying on the Adult Cohort of the National Educational Panel Study I use propensity score-adjusted regressions to estimate the average treatment effect on those that enroll in college based on vocational qualifications. The findings suggest high opportunity costs because treated individuals have an up to 67 per cent lower employment probability while being enrolled. After this initial phase individuals exhibit a similar employment level and job stability as those that continue with a vocational training-based career. All treated individuals take up more prestigious jobs. Enrolling in college is on average associated with at most 43 per cent higher life-time earnings compared to earnings when continuing with a vocational training-based career. However, recouping the opportunity costs of enrolling in college is a lengthy and risky process.

Published abstract.