Can vocational education improve schooling and labor outcomes?

Does the vocational education and training (VET) track improve schooling and learning outcomes? Can VET address issues on youth unemployment? These questions are central to ongoing policy debates about how to best integrate young people in the labor market. VET can be a compelling option for all students but specifically for those at risk of dropping out from school. VET’s proposed main benefit is to facilitate school-to-work transition, particularly when training aligns with businesses’ skill requirements.

This study examines the large expansion of upper-secondary VET in Portugal since 2005 (see figure), empirically assessing these claims. Using Ministry of Education microdata, the study explores the causal effects of the staggered rollout of VET courses across public schools. The main findings point to an increase in upper-secondary graduation rates, exceeding 50 percentage points for students enrolling in VET as a consequence of the reform. Notably, the positive impact of VET is stronger for girls, even though boys are more likely to enrol in VET courses. Students from lower socio-economic backgrounds and with weaker prior academic achievement also benefited more from the reform.

The paper also investigates key labor market outcomes, finding that VET graduates earn higher wages, have higher access to firm-provided training, and are more likely to secure open-ended (as opposed to fixed-term) contracts compared to their peers whose highest qualification is a lower-secondary or upper-secondary academic-track degree. Moreover, there is suggestive evidence of increased youth employment following local VET expansions. These findings indicate that VET courses help students accumulate human capital, which the labor market rewards at least as generously as the academic streams.

In conclusion, the study highlights the significant positive impact of VET on both educational and labor market outcomes, at least in the case of Portugal. Its findings suggest that the expansion of upper-secondary VET led to substantial gains for the affected individuals, particularly among disadvantaged students.

Click here to go to the paper by João Ferreira and Pedro Martins.