International Journal of Educational Development xxx (xxxx) xxx–xxx

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International Journal of Educational Development

journal homepage: www.elsevier.com/locate/ijedudev

Impact of vocational education and training on adult skills and employment:

An applied multilevel analysis
⁎
Su Jung Choia, Jin Chul Jeonga, , Seoung Nam Kimb
a
Seoul National University, 1 Kwanak-ro, Seoul City 08826, Republic of Korea
b
Korean Research Institute for Vocational Education and Training, 370 Sicheong-daero, Sejong City, 30147, Republic of Korea

A R T I C LE I N FO A B S T R A C T

Keywords: Vocational education and training has played a central role in promoting the school-to-work transition of young
Vocational education and training people. Despite this role, the return to Vocational Education and Training (VET) has been neglected in previous
Returns to education studies. This paper aims to examine individual returns to VET over a lifespan and to assess the effects of national
Returns to vocational education VET systems, including school-based and work-based VET systems, on economic outcomes. We use the OECD’s
Multilevel model
Program for the International Assessment of Adult Competencies (PIAAC) dataset for conducting our analyses.
Vocational education and training-oriented
country
The results of this study indicate that vocational track graduates are more likely to have literacy skill dis-
Work-based vocational education and training- advantages, short-term employment advantages, and long-term employment disadvantages compared to general
oriented country track graduates. The most significant finding is that there are substantial differences between work-based and
school-based VET systems with regard to their literacy and employment effects. Compared to VET graduates
from general education-oriented countries, VET graduates from work-based VET-oriented countries are initially
more likely to be employed, but that employment premium narrows faster over time. Therefore, a lifespan
overview and the characteristics of national VET systems should enter into policy debates on national educa-
tional systems.

1. Introduction
Vocational Education and Training (VET) is a key enabler of eco-
nomic development. In developing countries, VET—in the form of vo-
cationalized or diversified secondary schools—is an essential compo-
nent of economic development (Brunello, 2007; Lee et al., 2016; King
and Palmer, 2007). Most advanced economies also view VET as a means
of reducing youth unemployment (Hanushek et al., 2017; Nilsson,
2010; Schueler, 2016). In both academic and political sectors, VET is
assumed to facilitate the transition from school to work, especially for
students who are less academically inclined (Golsteyn and Stenberg,
2017).
However, although there is an assumed association between VET
and employability, empirical studies evaluating returns to VET are
limited. While a considerable number of studies have been conducted
on social returns and cost-benefit analyses of VET at the business/em-
ployer level (Ryan, 1998; Schueler, 2016), there is no coherent evi-
dence of private returns to VET at the individual level. Specifically,
existing empirical analyses of the impact of VET on individuals are
limited and ambiguous in three aspects. First, these studies suffer from
selectivity issues. Most economics and sociology research concludes
that ability level and family background are major factors affecting
educational choice, such that youths from disadvantaged families and
with lower ability tend to be in vocational tracks, and experience low
labor market outcomes. Studies must therefore control for family
background and ability level; otherwise these confounding factors may
cause under-estimation of the returns to VET. Second, any age effects on
returns to VET have also largely been ignored (Golsteyn and Stenberg,
2017; Hanushek et al., 2017; Nilsson, 2010; Schueler, 2016), and stu-
dies that have taken age into account have produced somewhat con-
tradictory findings. Recent studies such as Hanushek et al. (2017) and
Rocco and Brunello (2015) showed that the initial labor market ad-
vantage of VET decreases with age. Third, few studies have investigated
the differential impacts of varied national VET systems, but labor
market outcomes are affected by how different VET systems are orga-
nized. For example, VET curriculums are occupation-specific in some
countries but are much more general in others; some countries place
more emphasis on work-based VET programs, while school-based pro-
grams are dominant in other countries (Eichhorst et al., 2012). The
distinctions between VET systems are increasingly recognized as im-
portant, because, for example, school-based VET is more similar to
general education than to work-based VET in terms of curriculum,

⁎
Corresponding author.
E-mail addresses: shizu@snu.ac.kr (S.J. Choi), vince88@snu.ac.kr (J.C. Jeong), reoastro@krivet.re.kr (S.N. Kim).

https://doi.org/10.1016/j.ijedudev.2018.09.007
Received 28 March 2018; Received in revised form 17 September 2018; Accepted 25 September 2018
0738-0593/ © 2018 Published by Elsevier Ltd.

Please cite this article as: Choi, S.J., International Journal of Educational Development, https://doi.org/10.1016/j.ijedudev.2018.09.007
S.J. Choi et al.
teaching-learning methodology, and teacher expertise. In the same
vein, several studies have shown that there are considerable differences
in labor market outcome between school-based VET and work-based
VET systems. Despite these differences, the greater part of the literature
on returns to VET ignores the distinctions between VET systems.
The aim of this paper is therefore to analyze the private returns to
VET associated with the three aforementioned factors: selectivity bias,
age effects, and the differential influence of varied VET systems. More
specifically, here we analyze VET graduates’ probability of employ-
ment, compared to general education graduates’ employment prob-
abilities, over the lifetime. Additionally, we explore the influence of
different VET systems—including general education-oriented, school-
based VET, and work-based VET—on VET graduates’ employment ad-
vantages. This paper therefore contributes short-term and long-term
perspectives on individual returns to VET for a number of OECD
countries. In addition, this paper emphasizes the heterogeneity of VET
systems and the effects of this heterogeneity on returns to VET. The
remainder of this article is structured as follows: in the next section, we
review empirical studies on returns to VET; then we address the data,
methodology, and hypotheses used in this analysis; the following sec-
tion reports on an analysis of the disadvantages/advantages of VET on
short-term and long-term literacy and employment outcomes; in the
final section, we summarize our conclusions and provide some sug-
gestions for policy and further research.
2. Literature review
2.1. Macroeconomic and social returns to VET
VET for productive employment is considered vital for economic
and social development. Although this study focuses on private returns
to VET, we first review the literature on macroeconomic and social
development aspects of VET, as policy conclusions should be based
upon both levels of analysis, which occur simultaneously and may re-
inforce one another (CEDEFOP, 2012). At the macro-level, a multitude
of previous studies have succeeded in revealing a causal relationship
between VET and economic and social development (Baum, 2002;
Budria and Telhado-Pereira, 2009; Mupimpila and Narayana, 2009;
Nilsson, 2010; Spielhofer and Sims, 2004). Much of this literature pays
particular attention to VET’s ability to increase skills that are directly
applicable in the workplace. Consequently, these skills are likely to
have direct and indirect effects on productivity and therefore, on eco-
nomic growth. The most striking results to this effect come from in
which VET was shown to have a greater impact on Botswana’s eco-
nomic growth than tertiary education (Mupimpila and Narayana,
2009). Additionally, several qualitative research studies emphasize VET
as a tool for productivity enhancement and poverty reduction. For ex-
ample, VET is seen as an important tool in the transformation of Eur-
opean countries (Nilsson, 2010). Certain East Asian countries have also
successfully transitioned from developing to developed countries with
the help of VET; for example, studies on South Korea showed that their
rapid economic development could be attributed to the country’s edu-
cational system, including from an efficient VET system designed to
train the technical manpower required for industrialization (Park et al.,
2014; Lee et al., 2016).
With regard to social development, most studies report on the po-
sitive effects of VET for the integration of disadvantaged/marginalized
groups, which otherwise face labor market exclusion (CEDEFOP, 2012).
Compared to economic benefits, which tend to be reported on in
quantitative terms, social benefits tend to be reported on qualitatively.
One classic assumption of the social benefits of VET is that it plays the
role of a safety net. Problems with groups considered at-risk in society
(such as early school leavers, low-skilled workers, the unemployed, and
immigrants) have increased in recent decades and VET is a key element
in policies aimed at counteracting their social exclusion (CEDEFOP,
2012; McCoshan et al., 2008; Nilsson, 2010). Furthermore, the
2
International Journal of Educational Development xxx (xxxx) xxx–xxx
economic and social benefits of VET are interconnected. Low economic
benefits of VET can lead to insignificant or even negative social effects.
For example, low VET participation rates can result in high un-
employment, which creates societal instability (CEDEFOP, 2012).
2.2. Private returns to VET
2.2.1. Cognitive ability gaps and family background differences between
VET and general education graduates
Typically, when we compare the labor market outcomes of two
different groups, a basic assumption is that the individuals in both
groups are homogeneous. If they are not, we must be careful in esti-
mating treatment effects, since variables that differ between groups
may affect both treatment and outcome. In this vein, individual returns
to VET may be underestimated if students’ cognitive ability is not
considered. Cognitive ability gaps between vocational and general
education graduates have been consistently reported (Kuczera et al.,
2009; Kuczera, 2010). The main reason for such gaps is that children of
low cognitive ability are more likely to choose vocational tracks
(Brunello, 2007). NCVER (2017) also concluded that students who
choose VET are likely to be from lower socioeconomic status back-
grounds, with lower cultural capital, and perceive themselves as
average or below average in academic performance, relative to their
peers. Additionally, literacy and numeracy deficiencies among VET
students are rooted in weaknesses in basic education (OECD, 2010).
Vocational programs that provide insufficient time for academic sub-
jects may inhibit children’s learning. This phenomenon is more pro-
minent in the apprenticeship system where education is conducted in
the workplace. Another literature is related to children’s educational
choice, which may be determined by family background—at a given
level of ability, children from disadvantaged social origins are less
likely to make more ambitious educational choices (Boudon, 1974;
Breen and Goldthorpe, 1997). Therefore, children in VET programs may
strive to obtain a job after graduation and be less motivated to learn
basic subjects. Basic skills, by definition, provide no obvious link to a
labor market (OECD, 2010).
2.2.2. Labor market advantage of VET graduates
Many studies provide strong evidence that in the short-term, voca-
tional education has positive effects on a smooth school-to-work tran-
sition (Brunello, 2007; CEDEFOP, 2012, 2013a; Golsteyn and Stenberg,
2017; Hampf and Woesmmann, 2016; OECD, 2010). In an influential
paper, Ryan (1998) aggregated cross-country evidence indicating that
vocational programs, in particular apprenticeships, increase the
chances of an early working life and carry a modest income premium.
CEDEFOP (2012, 2013a) also concluded that VET graduates are more
likely than general education graduates to be employed and to obtain a
job relatively quickly. For individuals from socially disadvantaged fa-
milies, VET participation is especially found to be related to a higher
employment rate and to higher earnings (Kemple and Scott-Clayton,
2004; Kemple and Willner, 2008). Bishop and Mane (2005) found that
VET students appear to have a significant premium (such as higher
wages) over general education students. However, to some extent, these
findings differ between studies of different countries and with different
VET systems (CEDEFOP, 2013a, 2013b). Two studies, Malamud and
Pop-Eleches (2010) and Fersterer et al. (2008), that took advantage of
natural experiments to adjust for possible selection bias found no sig-
nificant differences between VET and general education, in terms of
unemployment rates and wage premiums.
2.2.3. Age effects on labor market advantages of VET graduates
One of the main limitations of the studies mentioned above is that,
by focusing on the transition from education to work, they adopt a
short-term perspective, neglecting long-term effects (CEDEFOP, 2013b;
Hanushek et al., 2017). With regard to the short-term advantage of
VET, recent studies suggest that this positive effect fades out over time.
S.J. Choi et al.
Hanushek et al. (2017) make an important contribution as they found
that the labor market advantage for vocational skills decreases with
age: At approximately 50 years of age, the employment merits of vo-
cational school graduates diminish to zero. Other studies, such as
Dustmann et al. (2017); Golsteyn and Stenberg (2017), and Rocco and
Brunello (2015), also support that the employment and earning profiles
of general and vocational graduates show a converging pattern. This
trade-off between short-term and long-term advantages indicates that
transferable skills are more likely to promote worker flexibility and
adaptability. In other words, people who acquire narrow, job-specific
skills tend to be at risk of a declining demand for those skills at future
points (Golsteyn and Stenberg, 2017). According to Krueger and Kumar
(2002), VET graduates are more likely to have specialized skills, and
this may increase difficulties in adapting to new technologies. In con-
trast, transferable skills such as literacy or numeracy can be acquired
through general education, so these skills allow for better and faster
adaptation to new technologies (CEDEFOP, 2013a). However, the
aforementioned reason is quite straightforward and an intuitive ex-
planation but it has not been examined with empirical evidence. Some
studies suggest that the negative long-term effects of VET might be due
to the characteristics of occupations that are strongly associated with
VET (e.g., technical jobs in the manufacturing industry). This implies
that declining employability and earnings with age are characteristics
of specific occupations rather than of VET, so the age effects mentioned
above should be interpreted cautiously.
2.2.4. Different VET systems and different effects
In contrast to general education, VET differs from country to
country in terms of systems, curriculum, and delivery methods. VET
around the world can be classified into two distinct systems: (1) school-
based and (2) work-based. The latter is called a dual system or ap-
prenticeship system, combining classroom learning with on-the-job
training. The former is integrated into compulsory schooling as an al-
ternative to an academic schooling track, and, similar to skills provided
by an academic education, the skills provided by vocational schools are
general and transferable compared to work-based VET (Becker, 1964).
School-based VET programs are also more likely to focus on general
subjects such as mathematics, language, science, and social studies,
with time spent in the workplace being less than 10% of the curriculum.
On the other hand, work-based VET aims to provide occupation-specific
learning for practically oriented youths. Because this system is based on
contractual relationships between apprentices and firms, a high com-
mitment and strong involvement of a firm is essential. Dual training has
several advantages that facilitate the transition from school to work,
and students may either continue with the firms under whom they
trained or gain easier access to further employment.
The only studies that we are aware of that directly contrast the ef-
fects of work- and school-based VET systems are Hanushek et al.
(2017); Hampf and Woesmmann (2016) and Choi (2015). These studies
indicate heterogeneity in VET programs across countries on the basis of
the intensity of their vocationalization. Hanushek et al. (2017) con-
cluded that the labor market advantage of vocational education is di-
minished with age and that this pattern was clearer in apprenticeship
countries. The notion of different patterns of VET advantages in dif-
ferent VET systems was also supported by Hampf and Woesmmann
(2016). Additionally, Choi (2015) suggested that the impacts of VET on
individuals’ labor market outcomes could be affected by country-level
VET systems. She assumed that VET premiums increase with the
country-specific share of vocational students. More specifically, people
who live in work-based vocational education-oriented countries have
higher likelihood of being employed compared to those who live in
general education-oriented countries. These assumptions are also par-
tially supported by Hanushek et al. (2017) and Hampf and Woesmmann
(2016).
3
International Journal of Educational Development xxx (xxxx) xxx–xxx
3. Methodology and data
This study used the Program for the International Assessment of
Adult Competencies (PIAAC) dataset from the OECD. The PIAAC is an
international survey conducted in over 40 countries that measures key
cognitive and workplace skills. The survey was implemented by inter-
viewing adults aged 16–65 in the year 2011. A notable feature of this
survey is the way it overcomes the limitations of conventional scoring
methods by using Item Response Theory (IRT) scaling to measure
adults’ cognitive skills. It therefore provides more accurate and valid
data on the skill levels of adults. Additionally, it provides a large sample
size per country, thereby allowing for richer subgroup analyses (OECD,
2013). The PIAAC covered 24 countries in its first round; thirteen of
these were used in this study: Austria, the Czech Republic, Denmark,
Estonia, Finland, France, Germany, Japan, Korea, the Netherlands,
Norway, Spain, and Sweden. Australia and the Russian Federation were
excluded from the current analysis because their data were not avail-
able at the time of writing. Poland and the Slovak Republic were ex-
cluded due to the unavailability of Propensity Scoring Matching (PSM)
for these countries; PSM was used, with literacy and family background
variables, to ensure that the sample of individuals with a vocational
education was directly comparable to that with a general education.
However, in these two countries, PSM failed to match the individuals.
The other 7 excluded countries (Canada, Cyprus, Ireland, Italy, the
United Kingdom (specifically England and Northern Ireland), and the
United States) were excluded due to the absence of a formal vocational
education track at their upper-secondary levels. For the purpose of this
study, the analysis was restricted to individuals who completed a sec-
ondary education program. Secondary education programs were de-
fined as general education if they were academic or college preparatory
programs; programs were defined as vocational education if they were
oriented to business or trade, or were vocational (OECD, 2010).
Table 1 shows summary statistics for the variables that are included
in this analysis. The PIAAC assessed cognitive skills in three domains:
literacy, numeracy, and problem-solving in technology-rich environ-
ments. To identify the relationship between VET and the skill level of
the individual, this study used only the literacy score, because the three
cognitive skill domains were highly intercorrelated (OECD, 2013) and
literacy is the most foundational and relatively basic skill. Additionally,
many studies suggest that literacy is a good proxy to represent in-
dividuals’ overall cognitive skills (OECD, 2013; Lim, 2013). The PIAAC
defines literacy as the ability to understand, evaluate, use, and engage
with written texts. Therefore, literacy encompasses a range of skills,
from the decoding of written words and sentences to the comprehen-
sion, interpretation, and evaluation of complex texts (OECD, 2013).
Literacy skill is measured on a 500-point scale, and six proficiency le-
vels are defined (levels 1 through 5 and below level 1). For example,
adults at level 4 (scores from 326 points to less than 376 points) can
perform multiple-step operations to integrate, interpret, or synthesize
information from complex or lengthy texts that involve conditional
and/or competing information (OECD, 2013).
Entire countries have adopted very different VET educational
structures. Korea, for example, has a school-based vocational system
that focuses on relatively broad occupational skills. On the other hand,
Germany has an apprenticeship scheme called the “dual system”, which
provides extensive firm-based VET. A considerable amount of literature
has been published on types of VET systems (CEDEFOP, 2012, 2013a;
Eichhorst et al., 2012; Hampf and Woesmmann, 2016; OECD, 2010).
VET systems may differ on the ratio of students participating in either
the academic or vocational track (general education-oriented and VET-
oriented, respectively) at the upper-secondary level. Previous studies
such as OECD (2010) and Hanushek et al. (2017) defined general
education-oriented countries as those countries whose general educa-
tion share is at least 60 percent, which is around the average for OECD
countries. In this study, the OECD average vocational education ratio,
45.7%, was used as a more precise criterion. Examples of general
S.J. Choi et al. International Journal of Educational Development xxx (xxxx) xxx–xxx

Table 1
Variables and descriptive statistics.
Variable name Coding Scheme N Mean SD Min Max

Individual Level
Female 1= Female, 0= Male 31,587 0.49 0.50 0 1.00
VET 1= Vocational track, 0= General track 31,587 0.66 0.47 0 1.00
PVLIT1 to 10a 10 Plausible Values, 500-point scale 31,587 273.43 41.87 51.54 441.39
Economic status Reference group: employed 31,587
Unemployed 1= Unemployed 31,587 0.05 0.21 0 1.00
Out of labor force 1= Out of Labor force 31,587 0.23 0.42 0 1.00
Parents’ highest level of education Reference group: Neither parent has attained the upper secondary level
Parental edu (middle) 1= At least one parent has attained secondary and post-secondary levels, non-tertiary 31,587 0.45 0.50 0 1.00
Parental edu (high) 1= At least one parent has attained tertiary level 31,587 0.21 0.41 0 1.00
Age cohort dummy Reference group: 16–29 years old
30–44 1 = 30∼44 years old 31,587 0.29 0.45 0 1.00
Above 45 1= above 45 years old 31,587 0.44 0.50 0 1.00

Country Level
VET-oriented country 1= VET dominant country at upper-secondary level including both types of VET (school-based and 13 0.77 0.44 0 1.00
work-based)
WVET-oriented country 1= Work-based VET dominant country at upper-secondary level 13 0.38 0.32 0 1.00

a
Descriptive statistics of PVLIT1 is only reported.

education-oriented countries are Asian countries such as Korea and
Japan. In these countries, vocational education is considered a so-called
non-mainstream education route, compared to general education. On
the other hand, VET is a prominent part of secondary education in a
number of mostly continental European and Scandinavian countries.
Another characteristic of VET systems considers the delivery method of
the system (Eichhorst et al., 2012). VET may be provided at the school,
at a company, or both. For the country level analysis, this study created
dummy variables that explain characteristics of the VET system. Spe-
cifically, countries were grouped based on the shares of upper-sec-
ondary school students in school- or work-based vocational programs,
calculated from the OECD (2012) and CEDEFOP (2013b). The work-
based VET (WVET)-oriented countries were Austria, Denmark, Ger-
many, the Netherlands, and Norway. The VET-oriented countries were
the work-based vocational countries plus the Czech Republic, Finland,
France, and Sweden. General education-oriented countries were Es-
tonia, Japan, Korea, and Spain, similar to the typology from OECD
(2010) and CEDEFOP (2012, 2013a).
This study employed three hypotheses to identify the returns to VET
and country effects in terms of VET type. Table 2 provides each hy-
pothesis and its model. For Hypothesis 1, which investigates the literacy
gaps between VET and general education graduates, we assessed the
relationship between literacy scores and the educational types (VET),
after controlling for variables such as gender, parental education level,
economic status and age. For Hypothesis 2, which examines the school-
to-work transition advantage of vocational graduates, we tested the
impact of educational type on the probability of employment. The
covariates from model 1 are included, as well as literacy scores. To
reduce concerns around selection bias, this study adopted PSM
methods, which used observed confounders such as literacy scores and
family background variables, to estimate the probability of each in-
dividual being assigned to the group of interest (VET). For Hypothesis
3, which tested the age effect on the school-to-work transition ad-
vantage of VET graduates, we assumed that the pattern of probability of
employment with age would be a reverse-U shaped curve. Additionally,
we assumed that the labor market advantage of VET graduates would
decrease with age. This is similar to Hanushek et al.’s (2012) approach.
However, in all models, we assessed the interaction effect of the country
level variable—VET-oriented or WVET-oriented—in the relationship
between literacy and education type. In other words, we assumed that
the labor market outcome advantage of VET graduates would be higher
for those countries in which vocational education, especially appren-
ticeships, are widespread.
This study used the Windows IEA IDB analyzer 3.2.23 and SPSS 17.0
for descriptive statistics, R 3.1.3 for the PSM method, and the HLM 6.0
for the multilevel analyses to test the hypotheses. The PIAAC data
provides plausible values (PVs), a final weight variable, and a replicate
weight variable for each measurement. Additionally, each individual
case in the PIAAC dataset has a set of ten PVs for literacy; this study
used all PVs, in line with OECD guidelines for using the PIAAC dataset
(OECD, 2013). HLM was appropriate for replicating the analysis across
all of the plausible values as it can compute standard errors of the es-
timated coefficients based on the full analysis (Tien et al., 2015). Al-
though HLM cannot use replicate weights for correcting standard er-
rors, we proceeded with the current analysis plan since Raudenbush
and Bryk (2002) stated that multilevel modeling could reduce the un-
derestimation of standard errors due to the cluster effect.
4. Results
4.1. Literacy gaps between VET and general education graduates
Table 3 shows that there are considerable gaps between general
education track graduates and vocational track graduates in terms of
their average literacy proficiency. On average, students who completed
vocational education have lower literacy proficiencies. The gap be-
tween these groups varies between countries, and Germany, Finland,
Denmark, France, the Netherlands, and the Czech Republic have an
especially large gap. In contrast, Japan and Korea show small and
statistically non-significant differences. In the case of Korea, contrary to
other countries, vocational education graduates over 45 years old have
higher levels of literacy proficiency than general education graduates.
One reason for this could be the dramatically rapid economic devel-
opment of Korea (Park et al., 2014). Meanwhile, in Japan, there were
no gaps in literacy skills between each educational type in each age
group.
Not only on average but also proportionally, adults who scored at
the lowest level of literacy were more likely to be vocational education
graduates. On average, 14.78% of adults who complete vocational
education programs were at level 1 or below; this was nearly twice as
high as the percentage of level 1 adults who completed general edu-
cation programs. Individuals at this level can only read short, brief texts
to locate single pieces of information (OECD, 2013). Adults performing
at this level can complete simple forms and understand basic vocabu-
lary, but they are not able to integrate, compare and contrast in-
formation, and identify information from various parts of a document.
This means that they are not illiterate, but that they can perform only
very limited tasks. This may lead to slower adaptation to new

4
 S.J. Choi et al.

Table 2
Models for testing the hypotheses.
Equation

Hypothesis 1. Individual level PVLIT 1ij to PVLIT 10ij = βoj + β1j (Female )ij + β2j (VET )ij + β3j (Unemployed )ij + β4j (Out of Labor )ij + β5j (Middle parental ed)ij + β6j (High parental ed)ij + β7j (Middle age group)ij
+ β8j (Old age group)ij + rij
Country level βoj = γ00 + γ01 (VET oriented) + μ 0j βoj = γ00 + γ01 (WVET oriented) + μ 0j
β1j = γ10 + μ1j β1j = γ10 + μ1j
β2j = γ20 + γ21 (VET oriented) + μ 2j β2j = γ20 + γ21 (WVET oriented) + μ 2j
βqj = γq0 + μqj for q = 4,5, 6,7, 8. βqj = γq0 + μqj for q = 4,5, 6,7, 8.
Hypothesis 2. Individual level Prob (Employed = 1| β ) = φ
Log (φ /(1 − φ) = ηi
ηij = βoj + β1j (Female )ij + β2j (VET )ij + β3j (Middle parental ed)ij + β4j (High parental ed)ij + β5j (Middle age group)ij + β6j (Old age group)ij + β7j (Literacy Score )ij + rij

5
Country level βoj = γ00 + γ01 (VET oriented) + μ 0j βoj = γ00 + γ01 (WVET oriented) + μ 0j
β1j = γ10 + μ1j β1j = γ10 + μ1j
β2j = γ20 + γ21 (VET oriented) + μ 2j β2j = γ20 + γ21 (WVET oriented) + μ 2j
βqj = γq0 + μqj for q = 4,5, 6,7, 8. βqj = γq0 + μqj for q = 4,5, 6,7, 8.
Hypothesis 3. Individual level Prob (Employed = 1| β ) = φ
Log (φ /(1 − φ) = ηi
ηij = βoj + β1j (Female )ij + β2j (VET )ij + β3j (Age /10)ij + β4j ((Age /10)2)ij + β5j (VET *(AGE /10))ij + β6j (Literacy Score )ij + rij
Country level βoj = γ00 + γ01 (VET oriented) + μ 0j βoj = γ00 + γ01 (WVET oriented) + μ 0j
β1j = γ10 + μ1j β1j = γ10 + μ1j
β2j = γ20 + γ21 (VET oriented) + μ 2j β2j = γ20 + γ21 (WVET oriented) + μ 2j
β3j = γ30 + μ3j β3j = γ30 + μ3j
β4j = γ40 + μ4j β4j = γ40 + μ4j
β3j = γ30 + γ31 (VET oriented) + μ3j β3j = γ30 + γ31 (WVET oriented) + μ3j
β6j = γ60 + μ6j β6j = γ60 + μ6j
International Journal of Educational Development xxx (xxxx) xxx–xxx
S.J. Choi et al. International Journal of Educational Development xxx (xxxx) xxx–xxx

Table 3
Comparison of the average literacy proficiency between VET and general education.
Country Discrepancy between VET and general education Percentage of level 1 or
below of vocational track

General Vocational Gap (V-G) t-value General Vocational

Austria 270.64 257.43 −13.21 −9.88*** 6.52 14.27

Czech Republic 282.50 268.62 −13.88 −8.61*** 2.94 12.38
Denmark 275.33 259.55 −15.78 −14.22*** 6.52 18.87
Estonia 272.87 266.04 −6.83 −7.72*** 10.83 15.99
Finland 291.97 273.04 −18.93 −14.75*** 3.74 13.45
France 267.89 254.34 −13.55 −16.36*** 7.68 22.30
Germany 283.04 263.57 −19.47 −11.63*** 4.44 18.08
Japan 288.40 287.96 −0.44 −0.37 5.40 4.46
16–29 years old 298.95 295.92 −3.03 −1.47 2.22 1.28
30–44 years old 296.42 296.82 .40 .22 3.48 2.08
Above 45 years old 278.25 279.25 1.00 .64 8.34 7.18
Korea 268.68 270.23 −1.55 −1.77 10.99 9.58
16–29 years old 290.47 283.49 −6.98 −4.45*** 2.58 4.14
30–44 years old 268.39 270.45 2.06 1.71* 10.97 9.28
Above 45 years old 258.83 261.40 2.57 2.21** 18.92 15.73
Netherlands 293.45 279.56 −13.89 −12.06*** 3.01 8.96
Norway 277.02 266.89 −10.13 −9.57*** 7.64 14.36
Spain 254.82 245.88 −8.94 −4.45*** 17.07 27.65
Sweden 279.21 273.30 −5.91 −4.91*** 9.41 11.83
Average 278.38 267.42 −10.96 −30.65*** 7.8 14.78

technologies. In addition, countries that had a relatively large profi-
ciency discrepancy, such as Austria, Czech Republic, Denmark, and
France, were more likely to have a higher ratio of low-proficiency VET
graduates.
The first column of Table 4 reports one-way ANOVA with random
effect results, which indicate that approximately 7% (ICC = 0.0758) of
the variance in literacy proficiency lies between countries. Column 2,
which includes individual level variables (Level 1), displays regression
coefficients that capture variation from country to country. Literacy
was found to be associated with higher parental educational levels and
lower age, similar to results from previous studies. We also found that,
on average, educational type was significantly associated (p < .05)
with adults’ literacy within countries, even after controlling for back-
ground variables. This means that, in the average country, adults who
graduate from the vocational track were scoring 12.0973 points behind
general education graduates with social backgrounds like their own.
The impact of educational type and background variables is quite large,
and those variables reduced within-school variance by 13.26% {=
(1563.6937-1356.2005)/1563.6937}. The estimates of level 2 var-
iances for the random-coefficient regression model provide empirical
evidence of variability in the impact of educational type on literacy
proficiency. All the slopes of the individual level variables are hetero-
geneous; consequently, we added a level 2 variable that explained those
variances. Given hypothesis 1, we developed explanatory models to
illuminate how differences between countries’ VET systems might in-
fluence the skills disadvantage of vocational education. There were no
significant relationships between countries’ mean literacy scores and
the type of VET system. Rather, mean literacy scores were significantly
higher in countries with work-based VET systems. However, the skill
disadvantage of vocational graduates was different between VET
countries and general education-oriented countries. In the average VET-
oriented countries, vocational education graduates scored 22.7681
points lower than general education graduates. In contrast, there was
no skill gap in non-VET-oriented countries. For WVET countries, the
country effect was −12.5475, which implies that the skills discrepancy
between VET and general education graduates is −6.8723 in general
education and school-based VET countries, but increases to −19.4198
{=−6.8723+(−12.5475)} in work-based VET countries.
4.2. Employment advantage of VET graduates
Our second hypothesis is that individuals who have completed vo-
cational education programs have a relatively low skill level but have
an employment premium. Column 2 of Table 5 indicates that overall,
VET graduates are more likely than general graduates to be employed.
The expected odds of employability of adults who experienced voca-
tional education are exp{.4646} = 1.5913 times the odds of employ-
ability of otherwise similar adults who did not experience vocational
education. The estimates of level 2 variances for the random-coefficient
regression model provide empirical evidence of the variability in the
impact of educational type on literacy proficiency. All the individual
level variables are heterogeneous, supporting our next step to add
country level variables. In this context, we added the organizational
level, that is, whether the country is a (W)VET-oriented country or not,
to predict the effect of the intercept and educational type on employ-
ability (see columns 3 and 4 of Table 5). The results show that the
effects of educational type on the probability of being employed depend
on whether the individuals are from WVET-oriented countries. In other
words, the employment advantage of a VET graduate was much bigger
in work-based countries. Column 4 of Table 5 shows that the odds of
being employed for an individual who experienced vocational educa-
tion from a WVET-oriented country is exp{.5039} = 1.655 times bigger
than that of an individual from a non-WVET-oriented country, whose
probability was .5590 { = 1/1+exp(−.2375)}. Meanwhile, whether
countries had or did not have a school-based VET-oriented system did
not affect individuals’ VET premiums on employability.
Another concern when analyzing the returns to vocational educa-
tion relative to those to general education is selection bias. Given that
the VET track is often intended for youths with lower motivation and
ability, non-causal estimates of the returns to vocational education will
be downward biased (McCormick et al., 1995; Tuma, 1994; Willis and
Rosen, 1979). Therefore, we adopt two different methods to reduce
selection bias: controlling for cognitive ability and using PSM. To assure
the matching quality of the PSM method, standardized biases and t-tests
were examined. The results show that all of the covariates were strongly
associated with the outcome and that the analysis had a standardized
bias of less than 0.3. Additionally, the results of t-tests indicated that
the covariate distribution of the two groups (VET and general education
graduates) was similar (p < .05). The employment advantages in VET
and WVET countries were still significant after controlling literacy

6
S.J. Choi et al. International Journal of Educational Development xxx (xxxx) xxx–xxx

Table 4
HLM estimates with literacy scores (Hypothesis 1).
Fixed effects (1) (2) (3) (4)
Null model Including level 1 variables Level 1+Level 2 Level 1+Level 2
(one-way ANOVA) (VET-oriented countries) (WVET-oriented countries)

Intercept 275.1401*** 289.4236*** 292.3476*** 285.4197***

(5.1105) (2.7329) (2.7454) (4.2946)
VET-oriented −5.3039
(3.9133)
WVET-oriented 9.6177**
(2.8112)
Gender(Female) −1.594 −1.5838 −1.5784
(.9573) (.9467) (.9504)
VET
Intercept −12.0973* 0.6570 −6.8723*
(5.3245) (1.6451) (3.5402)
VET-oriented −22.7681***
(2.2845)
WVET-oriented −12.5475***
(2.4872)
Work2_du .9453 .5422 .7389
(5.6470) (5.6503) (5.646)
Work3_du −3.4576* −3.4655 −3.5062*
(1.8427) (1.8381) (1.8313)
Parents Education_1 .3214** 8.3655** 8.3116**
(2.0256) (2.0382) (2.0391)
Parents Education_2 15.813*** 15.7607*** 15.7798***
(2.7658) (2.7858) (2.7807)
Age Cohort_2 −5.881** −5.9105* −5.8195**
(2.1478) (2.1644) (2.1377)
Age Cohort_3 −18.3689*** −18.4075*** −18.3566***
(1.5788) (1.5903) (1.5672)

Random effects Variance component

Intercept, U0 128.3348*** 70.8409*** 69.1122 106.2313***

Gender 4.0094** 3.7890** 3.8587**
VET 142.6525*** 14.3959*** 50.3693***
Work2_du 126.0060*** 125.0900*** 125.2940***
Work3_du 27.7267*** 28.3999*** 27.8104***
Parents Education_11) 21.6615*** 22.0233*** 22.0135***
Parents Education_2 33.9616*** 34.5818*** 34.5239***
Age Cohort_2 27.0735*** 26.8902*** 26.8750***
Age Cohort_3 17.2788*** 17.0107*** 17.8987***
Level-1 R 1563.6937 1356.2005 1356.0328 1356.0591
ICC = 0.0758

Standard errors in parentheses. ***p < .001, **p < .05, *p < .01.

scores. In addition, when we adopted PSM methods and compared these
results with the original data, the positive effect of VET still remained.
In fact, the interaction effect of a WVET country increased to .6532
from .5039. These statistics also suggest that the VET premium is un-
derestimated based on participants’ low cognitive ability.
4.3. Changes in the employment advantage of VET graduates over lifespan
We considered three additional variables for identifying changes in
the employment advantage of VET graduates over time: age, age-
squared, and the interaction between age and educational type.
Individual age data was not available for Austria and Germany, so these
two countries were excluded from this analysis. The basic model
(Column 2 of Table 6) with individual level variables showed a typical
age-employment pattern. The effect of the vocational education track
on the age variable was negative, and this tendency was stronger in the
case of VET and WVET-oriented countries. For example, while in-
dividuals who completed vocational education programs were initially
exp{.9307} = 2.5363 more likely to be employed than those with a
general education, the gap in the employment rate narrowed by exp
{.1561} = .9941 times the odds every ten years (see Column 2 of
Table 6). For WVET-oriented countries, the average employment ad-
vantage of the VET track was larger than for non-WVET-oriented
countries (exp{.7028 + .5972}, exp{.7028}, respectively),
corresponding to a probability of .7858 and .6688, respectively. How-
ever, this advantage diminished rapidly with age compared to non-
WVET-oriented countries, because the coefficient on the vocational
education-age interaction was negative (−.1079), and the WVET in-
teraction term was also negative (−.1249). This implies that, by age 65
{= (.7028/.1079)*10}, on average, in non-WVET-oriented countries,
the probability of being employed would be identical between voca-
tional education and general education graduates. On average, in
WVET countries, the probability of employment was reversed at age 55
{= (.7028 + .5972)*10/(.1079 + .1249)}. This pattern was robust to
adding covariates and literacy scores, but using PSM samples, the em-
ployment advantage of VET graduates was reported only in WVET
countries (Fig. 1).
5. Conclusions and policy implications
The aim of this paper was to compare employment trajectories as-
sociated with vocational education and general education over the
lifespan, considering not only an individuals’ educational type but also
each country’s VET system. For this purpose, we used PIAAC data, in-
cluding 13 OECD countries and 31,587 individuals who completed
upper-secondary school. HLM was utilized for the analysis of countries’
random effects.
The results of this study support the two most common working

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S.J. Choi et al. International Journal of Educational Development xxx (xxxx) xxx–xxx

Table 5
HLM estimates with Employability (Hypothesis 2).
Fixed effects (1) (2) (3) (4) (5) (6)
Null model Including level 1 variables Level 1 + 2(VET) Level 1 + 2(WVET) Literacy scores With PSM samples
controlled

Intercept .9150*** 1.2151** 1.8608*** 1.4267*** 1.4004*** 1.4673**

(.3462) (.2607) (.3170) (.3227) (.3314)
VE oriented −.8576***
(1.453)
Work-based VE oriented −.3653** −.3693** −.1161
(.1182) (.1141) (.1056)
Gender(Female) −.6645 ***
−.7354 **
−.6819*** −.6811*** −.6792**
(.1448) (.1785) (.1552) (.1585) (.1706)
VET
Intercept .4646** .6152** .2375* .2523* .1207
(.1929) (.2896) (.1338) (.1380) (.1096)
VE oriented −.1979
(.2159)
Work-based VE oriented .5039** .5332* .6532**
(.1632) (.1712) (.1685)
Parents Education_1 .0868* .0808 .0672 .0507 .0236
(.0450) (.0441) (.0421) (.0331) (.0686)
Parents Education_2 −.2069** −.2465 −.2386** −271** −.2754**
(.0850) (.0904) (.0816) (.0507) (.1203)
Age Cohort_2 .8414*** .839** .8606*** .8750*** .8439***
(.1618) (.2032) (.1673) (.1636) (.1341)
Age Cohort_3 .2990 .2681 .3028 .3420* .2919**
(.1747) (.2257) (.1782) (.1556) (.1559)
Literacy score .0021
(.0013)

Random effects Variance component

Intercept, U0 .2981*** .7294*** .2514*** .5489*** .5320*** .9066***

Gender .1499*** .1529*** .1510*** .1522*** .2197***
VET .3065*** .3799*** .1912*** .1918*** .1396***
Parents Education_11) .0158 – – – –
Parents Education_2 .0699*** .0132** .0304** .0301** .0339***
Age Cohort_2 .2650*** .2816** .2799*** .2869*** .1517***
Age Cohort_3 .3608*** .3951*** .6248*** .3877*** .2330***

Standard errors in parentheses. ***p < .001, **p < .05, *p < .01.
Random effect of Variable ‘Parents education_1’ was not significant in model 1, so this variable was fixed in other models.

hypotheses in the VET literature: There is a low literacy level and a
short-term employment premium for graduates of the vocational edu-
cation track. In the average country examined, individuals with voca-
tional education scored 12.09 lower than general education graduates
in terms of literacy ability. However, this was compensated for by the
higher probability of VET graduates being employed. VET graduates
had 1.519 times higher odds of employment than general education
graduates. With regard to the long-term effects of VET, this study in-
dicated that there were converging patterns in labor market outcomes
that also align with those suggested by Golsteyn and Stenberg (2017);
Hanushek et al. (2017), and Rocco and Brunello (2015). However, we
found that the employment advantage of a vocational curriculum re-
mained for individuals until 65 years of age in non-WVET-oriented
countries. This finding implies that the VET premium on employment
diminishes at a very slow rate. The notion of a converging pattern of
VET employment advantage has been commonly reported in previous
studies, but the rate of decline is not agreed upon by all. For example,
Dustmann et al. (2017) concluded that when individuals who com-
pleted VET were between the ages of 30 and 45, no differences were
found in terms of their labor market outcomes. Hanushek et al. (2017)
found that, by age 50, on average, general education graduates were
more likely to be employed than vocational education graduates. This
issue is crucial but must be left to further research using more data. The
question that now remains is why vocational education does not have a
lasting effect on employment. A possible explanation for this might be
related to the macroeconomic perspective that skill-based education,
compared to concept-based education, leads to a slower adoption of
new technologies (Hanushek et al., 2017; Krueger and Kumar, 2002). In
addition, a long-term advantage of general education may hinge on the
prevalence of on-the-job training (Golsteyn and Stenberg, 2017). As
Almeida-Santos et al. (2010) have shown, there is very limited evidence
of wage returns to training for older (above 45 years old) blue collar
employees. Another possible alternative explanation of our finding is in
the occupational structure and its lifetime earning profiles. VET grad-
uates are more likely to be employed in blue collar jobs, and blue collar
jobs are more likely to rely on abilities that decline early (Belbase et al.,
2016).
Our main contribution to the literature is that we provide empirical
evidence of both the difference between educational types and the
difference between WVET systems and school-based VET systems on
employment and literacy. The results of the study indicate that there
were significant differences among WVET-oriented countries, school-
based VET-oriented countries, and general education-oriented countries
in terms of VET’s premium. In other words, relative to the VET graduate
from general education-oriented countries, VET graduates from WVET
countries are initially more likely to be employed, but those employ-
ment premiums narrow faster to zero over age. However, both results
hold for only WVET countries, and not for school-based VET countries.
This implies that there are substantial differences in curriculum and
labor market outcomes between WVET and school-based VET.
Additionally, these results may be taken to indicate that for any as-
sessment of the labor market outcomes of vocational education, it is
particularly important to study comparisons of various national VET
systems. However, to get more precise and robust results, substantial
further studies need to be performed. Our estimates, especially the cross
level interactions, should be interpreted with caution, because the small

8
S.J. Choi et al. International Journal of Educational Development xxx (xxxx) xxx–xxx

Table 6
HLM estimates with age-interaction effects (hypothesis 3).
(1) (2) (3) (4) (5) (6)
Null model Including level 1 variables Level 1 + 2 Level 1 + 2 Literacy scores With PSM samples
(VET) (WVET) controlled

Fixed effects
Intercept .8432*** −5.3999*** −5.3300*** −5.3764*** −5.0994** −4.6343)***
(.0947) (.9842) (.1888) (.9831) (1.1981) (.8516)
VE oriented −.2179
(.2178)
Work-based VE oriented −.1119 −.1084 −.3140
(.2329) (.2373) (.2820)
VET
Intercept .9307*** .7614*** .7028*** .6879*** .0885
(.1076) (.1516) (.1045) (.1002) (.1033)
VE oriented .2948
(.2052)
Work-based VE oriented .5972** .5766** .3226*
(.1485) (.1611) (.1480)
*** ***
Age/10 3.2953 3.3115 3.2982*** 3.2923*** 3.0317***
(.4748) (.0655) (.4727) (.4680) (.3946)
(Age/10)2 −.3897*** −.3918*** −.3902*** −.3904*** −.3632***
(.0559) (.0079) (.0557) (.0545) (.0475)
VET*(Age/10)
Intercept −.1561*** −.1028** −.1079*** −.1059*** −.0000
(.0233) (.0299) (.0121) (.0117) (.0000)
VE oriented −.1000*
(.0373)
Work-based VE oriented −.1249*** −.1231** −.00003*
(.0348) (.0354) (.0000)
Literacy −.0008
(.0010)

Random effects
Intercept, U0 .0753*** .1198*** .1241*** .1306*** .1372*** .2000***
VET .0621** .0545 .0233 .0256 .0379***
Age10 –
(Age/10)2 –
VET*(Age/10) .0044*** .0013 .0014 .0015 .0000***

Standard errors in parentheses. ***p < .001, **p < .05, *p < .01.

sample size of level 2 might affect confidence intervals. Further studies
are needed to adopt advanced statistical approaches, including
Bayesian methods, which are more effective in small sample designs.
So, at present, conclusions and recommendations for policy will be
discussed only in very cautious terms.
With regard to policy implications, especially in developing coun-
tries, positive effects from vocational education are expected and pre-
sumed. Many governments are now interested in expanding VET pro-
grams for young people, at both upper-secondary and tertiary levels, to
tackle the problem of youth unemployment. However, as noted above,
VET is a heterogeneous category, containing school-based, work-based,
and other types of programs. Different economies adopt different mixes
of each type of VET. The results of this study also conclude that the
impact of VET varies considerably with the VET systems of each
country. Thus, a mixture of VET and general education should be
considered in policy debates about the establishment and reliance upon
vocational programs. Additionally, policymakers should make sure to
consider a mix of various VET programs, such as school-based and
apprenticeship schemes.
Policy debates on future government investment should consider

Fig. 1. Age effect of VET on employment in country groups.

9
S.J. Choi et al.
converging patterns of individual returns to VET. As Hanushek et al.,
(2017) and Golsteyn and Stenberg (2017) argued, the issue is not in-
dictment of the “vocationalization” of school policy regimes, but in-
stead an emphasis on basic skills in VET programs. The government
should also make continued efforts to persuade schools and firms to
stress key competencies in terms of their curriculum, pedagogy, and
learning output. Basic skills including literacy and numeracy are closely
related to the learning abilities needed to acquire new skills in a rapidly
changing work environment. This implies that VET students also need
to be provided enough opportunity to increase basic and transferable
skills within their curriculum. They should also be aware that sub-
stantial variation in this potential trade-off between short-term and
long-term effects depends upon the national economy and the labor
market context.
Another important practical implication of our study is that con-
sideration of the selectivity bias is crucial for evaluating returns to
vocational education. Both politicians and policymakers frequently
have expectations of VET that are much greater than those they have
for general education, despite the VET track often being intended for
youths with lower motivation and ability. To support evidence-based
policy-making and to adapt education and training, including VET, it is
important to increase knowledge not only of labor markets, but of the
outcomes of the various education options. However, to get more robust
results, further studies adopting advanced methods to reduce selection
bias should be followed.
Finally, this study does not address social returns to VET, which
have been examined in various empirical studies over the last decade.
These returns should also enter into policy debates on VET. VET is a key
element in proactive policies aimed at counteracting social exclusion by
improving lifelong learning accessibility and preventing school dropout
of at-risk youth. Policymakers should therefore give attention to eco-
nomic and non-economic returns to VET, particularly if they are con-
templating moving school systems toward more general or vocational
education. When we consider the cost of VET, which is typically higher
than that of general education, non-economic returns to VET including
social inclusion should be integrated into the debate.
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