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Evaluating the Impact on Labor Earnings of Higher Vocational Education

International bodies such as the EU and the OECD have repeatedly advocated improved opportunities for adults to improve their schooling. However, formal education for adults is expensive, particularly in terms of foregone earnings, and the returns to society and the individual is uncertain. Until recently, there is only scant evidence on the labor market impacts of post-secondary education for adults outside the US. This paper focuses on the earnings effects of higher vocational education (HVE) in Sweden.

In just 25 years, HVE has expanded from a small pilot project to comprise one third of all entrants in tertiary education in Sweden. Using difference-in-difference matching methods and longitudinal populational register data, we find positive effects on annual earnings for HVE-entrants compared to non-entrants regardless of gender or age. For our young sample (aged 19-29), the short-term returns peak at 17 percent for men and 30 percent for women, and 11 years after the entry decision the returns remain at a fairly high 8 percent for men but drops to 3 percent for women. The steep drop in returns for young women is likely explained by postponed childbearing. For our older sample (aged 30-54), we find a more stable effect of about 4-6 percent for men and 6 percent for women. Back of the envelope calculations show a positive internal rate of return of HVE for society of at least 6.7 percent.

Evaluating the Impact on Labor Earnings of Higher Vocational Education

Serial number: WP 2021:03

Reference number: 2021/70

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