Association for Public Policy Analysis & Management

In response to recent technological changes and worsening outcomes of non-college educated workers, governments around the world are becoming more interested in whether different types of secondary education might play a role in providing young people the skills they need after they graduate. Yet, in stark contrast to the growing body of evidence on the impact of various fields of study in higher education, there exists a paucity of compelling evidence on the impact of secondary school curricula on labor-market outcomes. Nonetheless, understanding the potential consequences of secondary school curricula is particularly important given that this choice takes place before higher education, and for many people is the highest level of education they receive before entry into the labor market.

In this paper, we study labor-market returns to vocational versus general secondary education using a regression discontinuity design created by the centralized admissions process in Finland. Admission to the vocational track increases annual income by 7 percent at age 31, and the benefits show no signs of diminishing with time. Moreover, admission to the vocational track does not increase the likelihood of working in jobs at risk of replacement by automation or offshoring. Consistent with the notion of comparative advantage, we observe significantly larger returns for people who express a preference for vocational education in their applications to secondary school.

These findings offer an important takeaway for policy-makers. Our estimates suggest a sustained demand for vocational skills, even in Finland – where nearly half of all cohorts enroll in the vocational track. With this in mind, there may be significant room for expanding the access to vocational secondary education in other developed countries.