Search Results

Technical education and training has been dramatically expanding in Brazil recently. However, there remains no evidence on the cost effectiveness of this alternative track to a more general education. This paper quantifies the wage returns of completing technical and vocational education and training compared with the returns of completing the general education track, for individuals with similar observable characteristics. Exploring data from the Brazilian National Household Sample Survey, the paper profiles the students taking up this track and quantifies the impact of different types of technical and vocational education and training courses on individuals’ hourly wages. After controlling for selection on observables with propensity score matching, the analysis shows positive and statistically significant wage premiums for students completing technical school at the upper secondary level (on average 9.7 per cent) and for those completing short-term training courses (2.2 per cent on average). The paper also documents significant heterogeneity of impacts depending on the courses and the profile of students. For realistic unitary costs of providing technical and vocational education and training, the evidence suggests technical education is a cost-effective modality. The courses offered by the publically financed and privately managed 'Sistema S', together with courses in the manufacturing area have the highest positive impacts.

Published abstract. Show less

This paper investigates the puzzling evidence on wages and educational attainment observed in Brazil in the 1990s: while returns to college have been rising by over 100 per cent and graduation rates at secondary and high school level have been steeply increasing, the proportion of students progressing to higher education has been decreasing. First, we present evidence that the low supply at college is not due to lack of availability in positions. Then, we specify a joint model of education choices, labour force participation and wages with unobserved heterogeneity affecting all elements of the model. We find that the observed changes in the returns to schooling only marginally reflect variations in the ability composition by level of education. They are mainly the result of changes in the market value of education: the educational expansion at intermediate depressed the wage at this level dramatically. The supply increase at high school did not translate into a proportional increase at college level due to binding credit constraints. The size of the supply effect on changes in the wages depends on the substitutability between aggregate labour inputs. We quantify this effect by estimating a [constant elasticity of substitution] CES production function that allows for different elasticities of substitution between four labour inputs. We find that complementarities in production between workers with high school and college [diplomas] are responsible for about 12 (31) per cent further decline (increase) in the relative return to high school (college) versus less than high school education with respect to the case of an isoelastic production function with no complementarities.

Published abstract reprinted by permission of the copyright owner. Show less