Who benefits from general knowledge?

Abstract

While vocational education is meant to provide occupational-specific skills that are directly employable, their returns may be limited in fast-changing economies. Conversely, general education should provide learning skills, but these may have little value at low levels of education. This paper contributes to this debate by exploiting a reform introduced in Spain in 1990 that postponed students’ choice between these two educational pathways from age 14 to 16. To identify exogenous changes in this policy, we instrument its staggered implementation with pre-reform province shares of students in general education interacted with cohort fixed effects. Results indicate that, by shifting educational investment from vocational to general education after age 16, the reform improves occupational outcomes and wages. However, these positive effects are concentrated among middle to high-skilled individuals. In contrast, those who acquire only basic general education have worse long-term employment prospects than vocationally-trained individuals.