Fluctuations in the wage gap between vocational and general secondary education: lessons from Portugal

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. © 2021, The Author(s).

Keywords

Author Keywords

human capital Returns to education Vocational wage gap Worker-firm allocation

Index Keywords

Author Affiliations

Universiteit van Amsterdam, Amsterdam, Noord-Holland, Netherlands

UCP - Católica Lisbon School of Business & Economics, Lisbon, Lisbon, Portugal

Funding & Acknowledgements

Ministerio de Educación, Cultura y Deporte, MECD

Grant: ECO2010-20829

Funding text 1: We are grateful for the comments from five anonymous referees and the editor, Klaus F. Zimmermann, which have led to substantial improvements of the paper. We are also grateful for helpful comments and suggestions from Isabel Horta Correia, Luísa Canto e Castro Loura, Pedro Portugal, Pedro Telhado Pereira and Jorge Correia da Cunha. We have also benefited from comments made by participants at the IZA/SOLE Transatlantic Meeting of Labor Economists, EALE conference, China meeting of the Econometric Society, CVER conference, Portuguese Ministry of Education workshop and Bank of Portugal seminar. We are grateful to the Portuguese Ministry of Employment for access to the data and thank Lucena Vieira for outstanding data and computational assistance. The data used in this paper (Quadros de Pessoal—QP) builds on anonymised micro datasets that can be obtained by filling an accreditation form according to the protocol established by Statistics Portugal (INE). Request for getting access can be emailed to: info@ine.pt. The authors are willing to assist in this process (Pedro Raposo; pedro.raposo@ucp.pt). The data request forms are available in the website of INE. The usual disclaimer applies. An old working paper version of the article circulated under the title “Vocational high school graduate wage gap: the role of cognitive skills and firms”.; Funding text 2: Joop Hartog would like to acknowledge the financial support of the Spanish Ministry of Education (grant number ECO2010-20829).

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Fluctuations in the wage gap between vocational and general secondary education: lessons from Portugal

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