Abstract
We document and analyse the wage gap between vocational and general secondary education in Portugal between 1994 and 2013. As Portuguese workers have been educated in different school systems, we have to distinguish between birth cohorts. Analysing the wage gaps within cohorts, we find no support for either the human capital prediction of crossing wage profiles or the hypothesis that general graduates increasingly outperform vocational graduates in late career. We discover that the lifecycle wage profiles have shifted over time. We link the pattern of shifting cohort profiles to changes in the school system and in the structure of labour demand. We conclude that assessing the relative value of vocational education requires assessing how the vocational curriculum responds to changes in economic structure and technology. We show that the decline in assortative matching between workers and firms has benefited vocationally educated workers.
Highlights
Debates on the relative value of vocational versus general education have a long history among educators, politicians, employers and labour unions and opinion leaders
We find that a decline in assortative matching between firm fixed effects and worker fixed effects is an important factor in understanding the evolution of the wage gap over time
We present a brief history of the Portuguese school system in Section 2 and indicate how the differentiation between vocational and general education at the secondary level has evolved
Summary
Debates on the relative value of vocational versus general education have a long history among educators, politicians, employers and labour unions and opinion leaders. A strong indication of potential relevance is Malamud and Pop-Eleches (2010), who examine relative benefits during Romania’s transition to a market economy, when an educational reform shifted a large proportion of students from vocational training to general education. They conclude, from a regression discontinuity design, that selection was the main driver of differences in labor market returns between graduates of vocational and general schools. We document and interpret changes in the wage differential among graduates from secondary education with a vocational and a general curriculum in Portugal for cohorts born between 1951 and 1994. An online appendix in Hartog et al (2021) provides a detailed description of the international standard classification of occupations (ISCO) and additional empirical results that have been omitted from the main text and Appendix
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