To complete the Journal article, “A Road Map To Vocational Education And Training In Industrialized Countries”

To complete the Journal article, “A Road Map To Vocational Education And Training In Industrialized Countries”Order DescriptionThe Journal Article that I’ll upload to you guys later.Please read the Journal,“ A Road Map To Vocational Education AndTraining In Industrialized Countries” and finish the reading critique that according to the following criteria:1. Briefly describe the journal and its focus2.Summarize the article you have chosen so that readers have an understanding of the article’s purpose, argument, content, and conclusions.3. which of the course you topics does the article address(e.g. economy, transformation, popular culture, etc)? if it doesn’t fall under one of the course topics, which aspect of adult education do you think it addresses? what did you learn about the topic from the article? what are the article’s strengths and limitations?4. what are your reactions and reflections on the article? For this question, you need to be creative in how you present your responses. For example, you might record a discussion you had, present your reaction as a dialogue, or create a picture, poem, mind map, or graphic representation of your reflections to complement your summary.5. Prepare a few discussion questions engage with in relation to your Journal article.ILR Review, 68(2), March 2015, pp. 314–337DOI: 10.1177/0019793914564963. © The Author(s) 2015Journal website: ilr.sagepub.comReprints and permissions: sagepub.com/journalsPermissions.navA Road Map To Vocatio nal Educatio n AndTraining In Industrialized CountriesWerner Eichhorst, Núria Rodríguez-planas,Ricarda Schmidl, and Klaus F. Zimmermann*Young people have been among those most affected by the recentfinancial crisis. Vocational education and training (VET) is oftenviewed as the silver bullet for the youth joblessness problem. In thisarticle, the authors provide a better understanding of VET in industrializedcountries, proposing a typology with three types of vocationalsystems: 1) vocational and technical schools, 2) formalapprenticeships, and 3) dual apprenticeship systems that combineschool training with a firm-based approach. They first describe thestrengths and challenges of each system. They subsequently reviewthe evidence of the effectiveness of VET versus general educationand the relative effectiveness of the different VET systems. Resultsindicate that VET is a valued alternative beyond the core of generaleducation and that the use of apprenticeships combined withinstitutional learning tends to be more effective than school-basedVET.Unemployment rates among youth have soared since the Great Recessionof 2008, doubling the adult unemployment rate in many developedcountries. While many young people have responded to sluggish labormarket prospects by continuing tertiary education and investing in theirhuman capital, others have withdrawn from education, training, andemployment. According to OECD (2013) data, youth unemployment ratesare now above 35% in countries such as Portugal and Italy and are above50% in Spain and Greece, while they are still below 10% in countries such asGermany, Switzerland, and Austria. The share of youth (aged 15 to 24) inneither employment nor education (NEET) in 2012 ranged from 4 to 7% inthe Netherlands, Denmark, and Switzerland and up to 18% or more in*Werner Eichhorst is affiliated with IZA. Núria Rodríguez-Planas is affiliated with Queens Collegeof CUNY and the Institute for the Study of Labor (IZA). Ricarda Schmidl is affiliated with the Universityof Mannheim and IZA. Klaus F. Zimmermann is affiliated with IZA and Bonn University. We thankCostanza Biavaschi, Corrado Giulietti, Michael Kendzia, Alexander Muravyev, Victoria Finn, and JannekePieters for their input and support. Inquiries can be directed to nrodriguezplanas@gmail.com orEichhorst@iza.org.564963ILRXXX10.1177/0019793914564963ILR ReviewVocational Education And Training In Industrialized CountriesKeywords: vocational education and training, apprenticeships, dual VET, vocational schooling,developed countriesVocatio nal Educatio n And Training In Industrialized Countries 315Greece and Italy.1 Regarding the situation of young labor market entrants,the 2008 crisis and its aftermath clearly highlighted the interaction of acyclical development with long-standing institutional features governing thetransition from school to work. The situation deteriorated particularly inthose countries where young people had difficulty entering the labor marketeven before the crisis, while other countries succeeded in maintaininglow youth unemployment rates by a variety of means.Against this background, we look at the role of various types of vocationaleducation.2 Vocational education and training (VET) is frequently perceivedas the solution to improve the opportunities of youth who lack theresources, skills, or motivation to continue with higher education. Forexample, in countries such as the United States, the recent economic crisishas reignited an earlier discussion of building up a larger and more effectiveapprenticeship system (Harhoff and Kane 1997; Lerman 2012).3 In particular,researchers, policy advisors, and other experts often argue that VETprovides useful skills to prepare youth for a smooth entry into the laborforce (Quintini and Martin 2006) by aligning initial education more closelyto particular vocations and tasks demanded in the labor market.After classifying VET in industrialized countries into distinct systems, wereview the evidence on their effectiveness in facilitating transitions intoemployment and in raising earnings, and highlight the relevant institutionalfeatures that support the effectiveness.4 With this, we aim to provide evidencethat can be crucial in designing programs to counteract the labormarket problems exacerbated by the Great Recession.A Typology of VET ProvisionThis section provides a typology of VET provision, reflecting the variousVET models found in practice among a range of countries. This topologyfocuses on two dimensions. First, differences in provision may be viewedalong a continuum, reflecting the relative importance of institutional learningand workplace training. At one extreme, vocational schools can provideVET that is not complemented by work-based training; at the other, older1NEET rates are taken from the OECD employment database and are based on national labor forcesurveys.2In this article, we use the term “vocational education and training” (VET) to refer to qualifying educationpaths that provide individuals with occupation-specific knowledge and practical skills, independentof the place, content, and educational provider. Our focus is on initial VET, in contrast tovocation-specific education and training as part of life-long learning (see Arulampalam, Booth, andBryan 2004; Bassanini et al. 2007 for workplace training in Europe). A related study (Zimmermann,Biavaschi, Eichhorst, Giulietti, Kendzia, Muravyev, Pieters, Rodríguez-Planas, and Schmidl 2013) connectsvocational training with youth unemployment around the world, including developing countries.The novel feature of our paper is the systematic and updated review of the major types of vocationaltraining systems from a policy perspective.3Of course, VET is complementary to the various policies boosting labor demand (typically industrialpolicies) in its goal to improve youths’ transition into employment.4In medium-income countries and in the developing world, an alternative classification is appropriate;see Zimmermann et al. 2013 and Eichhorst, Rodriguez-Planas, Schmidl, and Zimmermann 2013.316 ILR Reviewunion-dominated apprenticeships did not include formal theoretical institutionallearning. A second dimension is whether institutional-based learningis provided within formal secondary school frameworks (part of the educationsystem) or at vocational training centers (which often have close tiesto industry). Below we review these three systems.Vocational and Technical Secondary SchoolsMany countries maintain a large vocational schooling system as part of theirupper secondary education. In these countries, the initial schooling systemis characterized by the duality between general and vocational education.While the former aims to provide youth with general, often academicallyoriented knowledge as the basis for further (higher) education and training,VET provides youth with practice-oriented knowledge and skills thatare required in specific occupations. VET typically follows a formal curriculumthat combines general and occupation-specific knowledge. Compulsoryschooling integrates VET as an alternative to an academically orientedschooling track, or as part of several post-compulsory education options.Similar to academic education, the skills that vocational schools provide aremostly general in the sense that they are transferable between employers(Becker 1964); however, there might be differences in the degree of transferabilityacross occupations. While some countries have a VET system thattransmits skills that are not restricted to one particular occupation, othersprovide vocational schooling for specific types of occupations (Shavit andMüller 1998).Why Do Governments Offer School-Based Vocational Training?The supply of VET by governments through the educational system can bejustified as a means to improve the opportunities of youth who lack the skillsdemanded in the labor market, the ability or motivation to continue withhigher education, or the funding to pursue higher education. Furthermore,individuals might prefer this option to academic education as it implies ashorter human capital investment and facilitates earlier entry into the labormarket. Many countries that provide a vocational schooling option duringcompulsory schooling perceive this as an alternative for poor academic performanceor at-risk youths (Neuman and Ziderman 1999), as well as a safetynet for early school dropouts and those who are less academically inclined.The close link to work tasks and hands-on practical experience may motivatepractically oriented youths to continue training and to remain in schoollonger. Furthermore, researchers have argued that establishing a vocationaleducation track during school is a means to reduce the influence of parentalbackground on educational choices, thereby increasing intergenerationalmobility. Given that the educational decisions of youths are oftenlinked to the educational attainment level of their parents, participation ina vocational track might allow those from working-class backgroundsVocatio nal Educatio n And Training In Industrialized Countries 317to pursue educational attainment beyond the compulsory level, henceincreasing their chances of attaining skilled rather than unskilled employment(Shavit and Müller 1998).In most cases, participation in either vocational or academic courses duringschool is operationalized by tracking students in the two respective pathways.The benefits of such a tracking system are not clear, as leaving schoolwith vocational qualifications often translates into reduced options of furtherpost-compulsory education, particularly the academic type. The incentiveeffect of learning more practice-oriented skills might therefore be mitigatedby high costs of later switching to academic education. Although thetechnical possibility of transferring to academic education might exist, earliertracking will lead to strongly divergent levels of skills and competences(Woessmann 2008). Furthermore, through separating higher and lowerperforming students, VET might counteract the equalizing potential ofvocational education (Shavit and Müller 2000). Given that very few youthmanage to enter academic education after vocational schooling (Kogan2008), populations in many countries often have a low regard of the vocationalschooling option since they perceive it as a dead-end track and asecond-choice education.Southern European CountriesMost of the vocational training in Spain takes place in school instead ofwithin a firm: Only 4% of those in vocational upper-secondary education inSpain combine school- and work-based training (CEDEFOP 2010). Similarly,three in four young people in vocational training in France participatein school-based vocational training as opposed to the apprenticeship alternative.In Italy, firm-level vocational training is not widespread since it isused only in crafts, retail, and large manufacturing companies, and is basedon fixed-term employment contracts.Youth in these countries face particular difficulties when trying to enter thelabor market, especially since the recent economic crisis has aggravated theselong-standing problems. In addition to having above-average NEET rates,labor market entry is difficult for both low- and high-skilled young people.One major factor is the deep labor market segmentation between permanentand fixed-term contracts, which can be attributed to strict dismissal protectionand largely liberalized temporary employment. Another issue is wagecompression in low-skilled occupations by collective bargaining. For instance,collective bargaining in Spain, which is centralized at the province and industrylevel, sets “entry minimum wage” above the legal minimum wage, inflatingthe lower part of the wage distribution and resulting in relatively high earningsfor young workers and those least qualified. Together, employment protectionand wage compression make it difficult in Spain for youth to becomeestablished in the labor market and to transition to a permanent position.Such effects on youth employment have been found in previous internationalwork such as Bertola, Blau, and Kahn (2007) and Kahn (2007).318 ILR ReviewIn some of these countries, the relatively marginal role of vocationaltraining can be explained not only by a limited interest of employers inmore formal vocational training (given the dual-employment structure) butalso by strong expectations of upward social mobility on behalf of youngpeople and their families, which creates strong preference in favor of academictraining (Planas 2005). Moreover, a long tradition in these countriesis to subsidize temporary employment and training contracts as part ofActive Labor Market Policies (ALMP). The effectiveness of these measuresis questionable, however, as explained by Felgueroso (2010) in Spain, Rogerand Zamora (2011) in France, and Tattara and Valentini (2009) in Italy.Evidence from cross-country comparisons in Europe, which haveattempted to implement vocational schooling systems, points to the necessityof several systematic elements to ensure success, as described below(Woessmann 2008; Gambin 2009):1. Ensure curricula relevance: All stakeholders (government, employers,social partners, educational institutions) need to be involved in curriculumdevelopment, with a clear assignment of responsibilities. The weightof the respective voices might differ across countries.2. Maintain close labor market contact: A system of continuous feedbackfrom employers and private-sector institutions allows for adaptation ofthe training content to labor market needs. This element requires a highdegree of employer involvement.3. Ensure high-quality training: Sufficient funding is required to guaranteethe appropriate teaching material and the availability of well-trainedteachers. A decentralized system of quality assurance and local competitionamong training centers, in combination with output-based fundingand licensing, needs to be established.4. Establish qualification frameworks: Centralized accreditation of trainingcurricula creates transparency and promotes acceptance among employers.5. Limit the risk of creating a dead-end vocational schooling track: Thecompetences and qualifications acquired should be comparable andcreditable to academic qualifications to promote transferability betweenthe two and to avoid stigmatization of vocational schooling participants.Formal ApprenticeshipIn some countries, VET is provided through formal apprenticeships, with institutionalinstruction complementing workplace training. This arrangementoccurs primarily in the United Kingdom, the United States, and Australia.The United KingdomIn the 1980s, traditional apprenticeships lost their appeal in the United Kingdombecause of “the recession, the removal of supports and the introductionof cheaper, less-valued alternative training schemes such as theVocatio nal Educatio n And Training In Industrialized Countries 319Youth Training Scheme (YTS) and its successors” (McIntosh 2007: 4). Withthe relative shortage of intermediate (Level 2 and Level 3) vocational skills inthe mid-1990s, however, apprenticeships were reintroduced as ModernApprenticeships at Level 3 and National Traineeships at Level 2. Despite considerablepublic interest in their expansion, the overall participation ratesremained rather low during the early 2000s. Possible explanations for thismodest involvement include 1) the lack of a central and rigorous assessmentof the apprentices’ qualification obtained; 2) the high costs of apprentices toemployers, relative to other countries such as Austria, Germany, or France,among others (Steedman 2010); and 3) a shift toward offering apprenticeshipsto older youths who had previously worked at the company (Wolf 2011).The 2009 reform—the Apprenticeship, Skills, Children and LearningAct—addressed some of these issues, in particular tightening the linkbetween the apprenticeships and employers and offering larger incentivesfor employers to increase training activities. Subsequently, the number ofyouth below the age of 25 who participated in apprenticeships increasedfrom 387,000 in 2007–2008 to about 460,000 in 2011–2012. In 2010, the UKgovernment implemented the Specification of Apprenticeship Standards forEngland (SASE), harmonizing the qualifications of the various apprenticeshipsand increasing transparency in training activities. In addition, theUnited Kingdom offered employers a grant of 2,500 pounds per apprenticeaged 16 to 17 years old. In 2012, they extended the grant to incentivize trainingof those up to 24 years old. Moreover, they started the National Apprenticeshipweek, a yearly public event to draw media attention to the benefits ofoffering and learning in apprenticeships, as well as to increase the acceptanceof apprenticeships. Further government reforms are currently underwayto improve training quality and transferability and to ensure continuousadaption of the qualifications and skills to align with economic demand(Department for Education, Department for Business and Skills 2013).The United States of AmericaIn the United States, formalized apprenticeships have a limited role and arelargely confined to adult education in so-called Registered Apprenticeshipsin the construction industry (e.g., electricians, carpenters, plumbers, andothers). Through the combination of time spent in theoretic instructionand work-based training, the apprenticeship system imparts both generaland occupation-specific knowledge; however, the place of training is concentratedin the firm, as the apprenticeship system operates without anyclose links to formal education.5The Office of Apprenticeship (OA) in the U.S. Department of Labor(DoL) is in charge of the registration and evaluation of VET. Thereby, the5Alternatives to apprenticeships in the United States are specific programs targeting at-risk youth andtraining students for careers in specific sectors, combining high-school classes, training, and work experience(see Holzer 2012 for a thorough review).320 ILR ReviewAdvisory Committee on Apprenticeship (ACA) supports the OA. Across 26states, State Apprenticeship Agencies (SAAs) are responsible for the apprenticeshipprograms, including the provision of technical assistance. Currently,around 21,000 apprenticeship programs are registered in the UnitedStates. Participation numbers from the DoL count approximately 290,000active apprentices in 2012. Since 2008, the number of active apprentices hasbeen steadily decreasing, largely because of a steep decline in the numberof new apprentices. This figure accounts only for apprenticeships notoffered by the military (currently around 70,000) and for those registeredwith the labor office. Lerman (2012) suggested that the actual number oftotal apprentices is higher, given that not all apprenticeships have to be registered.Contrary to the European model, U.S. apprentices are in their midtolate-20s and have most likely already gained some work experience.AustraliaAlthough the majority of VET participation is school-based (80% in 2011), acomprehensive Australian Apprenticeship system also exists. This system differentiatesbetween two types of contracts: apprenticeship contracts and traineeshipcontracts. Apprenticeships refer to technical occupations and the traditionaltrades, whereas traineeships apply to all other occupations (Karmel,Blomberg, and Vnuk 2010). These traineeships are comparable to furtherqualifying training that occurs in other countries because of their short duration(typically less than one year). The contracts are structured in both workbasedlearning with an employer and school-based education with certifiedtraining providers. Contrary to apprenticeships, which have a long traditionin Australia, traineeships were introduced in 1985 to counteract unemploymentof those aged 15 through 19 with low levels of schooling. The participationin apprenticeships and traineeships has significantly increased across allage groups over the past years due to supportive policies, such as financialhiring incentives, part-time training, minimum training wages, and waivedage restrictions (ibid.). Specialized subsidies have encouraged the training ofworkers aged 25 and over as well as mature workers (45 and above); thus, theshare of adults among participants increased to one-third and two-thirds,respectively, of all new entries into apprenticeships (traineeships).Dual SystemIn Austria, Denmark, Germany, and Switzerland, the dual VET accommodatesbetween 40% (Austria) and 80% (Switzerland) of all school leavers.The dual apprenticeship systems in these four countries share the followingfour key institutional elements.1. A high degree of formalization: They provide training in centrally accreditedoccupational qualifications, and the training content is continuouslyadapted to meet the changing labor market requirements.Vocatio nal Educatio n And Training In Industrialized Countries 3212. Strong involvement of social partners: Representative advisory boardsassist in developing and maintaining curricula at the governmental andfederal level. Regional trade or occupational committees, or a combinationof the two, undertake implementation and monitoring.3. Vocational colleges provide the school-based part of dual apprenticeships:Colleges cover both general and occupation-specific education.The government bears the costs of training in the schools.4. Firms must meet certain technical standards: A training firm will notobtain accreditation if standards are not met. Offering apprenticeships isoptional for companies, but those who choose to offer them follow standardapplication procedures to match the firm with trainees. The trainingcompanies cover the training costs within the firm.Why Would Firms Invest in General Training?While dual training exhibits several advantages from societal and individualperspectives, establishing an efficient dual apprenticeship system cruciallydepends on the willingness of firms to participate. To ensure postapprenticeshipskill transferability across firms, the training should providea sufficient amount of general schooling. As Becker (1964) noted, however,in a perfectly competitive labor market, in which workers are paid accordingto their marginal productivity, firms have no incentives to invest in generalschooling because workers could leave directly after the training periodin order to reap all the benefits of their acquired general skills.6 Hence, forfirms to provide both specific and general training, the worker must bearthe general training costs. Implementation would include state-fundedschool-based general education or firm-based general training, along withworkers paying for their training costs. Alternatively, firms could be incentivizedto participate, if they were able to recoup part of their investments bycontractual arrangements ensuring that either 1) apprentices accept a wagelower than their marginal productivity during the training period, or 2)apprentices continue to work for the firm beyond the training period (Malcomson,Maw, and McCormick 2003). In fact, what we see in countries suchas Germany, Switzerland, and Austria is a specific collective agreementreached between unions and employer associations, or wage recommendationsissued by professional associations, setting a generally applied rate forapprentice remuneration. This wage is significantly below the earnings of afull-time low-paid job and thus can be seen as a part-time wage or some basicincome support during the training period.In practice, this model seems to explain firms’ incentives to offer training.In some countries, such as Switzerland, the low level of wages and thestrong involvement of apprentices in the productive activities during the6As discussed below, many firms do invest in their employees’ general training. Some reasons thatexplain this are informational asymmetries regarding workers’ productivity, search costs and market frictions,or monopsony power.322 ILR Reviewapprenticeship allow firms to incur a net benefit during the training period(Lerman 2014). In other countries, such as Germany, some firms are foundto incur a net cost during the training period (Harhoff and Kane 1997;Dionisius et al. 2009).Several theories attempt to find alternative explanations of the trainingactivities of firms (for an excellent overview, see Wolter and Ryan 2011). Inparticular, Acemoglu and Pischke (1998, 1999, 2000) developed andextended the framework of Katz and Ziderman (1990) in which informationalasymmetries regarding the abilities of workers and the quality oftraining received can lead to sufficient incentives for firms to invest in generaltraining. Given that firms are able to learn the ability of the worker duringthe training period, the additional presence of a compressed marketwage allows firms to pay high-ability workers less than their marginal product,hence reaping part of the benefit of training. A compressed wage structuremight arise because of 1) information asymmetries and complementaritybetween ability and training in the production function (Acemoglu andPischke 1998); or 2) search costs combined with market frictions such ascollective bargaining, minimum wages, and firing costs, which are higherfor high-skilled workers (Dustmann and Schönberg 2009). Booth and Zoega(2004) pointed out that wage compression is not a necessary condition forthe emergence of firm-based training, but suggested that all setups resultingin a situation in which training increases the worker’s productivity morethan their wage are expected to stimulate the investment in training. In particular,factors reducing the apprentice’s propensity to quit after the apprenticeshipincrease the willingness to invest in training.Another set of models explores the deterring effect of poaching, a practicein which firms not investing in training might hire apprentices from thetraining firm by offering them higher wages. Hence, firms are more likely toengage in training if they are able to enjoy some monopsony power arisingfrom industry- and occupation-specific skill requirements, dispersed regionallocation of firms, and lower product market competition (Gersbach andSchmutzler 2006; Smits 2007; Lazear 2009). While the incidence and relevanceof poaching is difficult to measure, recent evidence from Germanysuggests that 3% of training firms in Germany are poaching victims. Firmsin bad economic situations that are unable to make counter offers are particularlyaffected (Mohrenweiser, Zwick, and Backes-Gellner 2013).A further potential reason to participate in training might be that firmsprefer to ensure their own future skill supply by providing such trainingthemselves. Some countries, however, such as Switzerland, maintain a largedual system and have a high turnover rate after training (Wolter and Schweri2002). It may be that firms train apprentices to use them in current production,and although firms might incur a net cost for the average productiveapprentice, some high-productivity apprentices might also be paid less thantheir marginal productivity, given that the overall wage level for apprenticestends to be low (Mohrenweiser and Zwick 2009). In particular, if few outsideVocatio nal Educatio n And Training In Industrialized Countries 323options exist for youth, they might be willing to engage in such a paymentscheme since they would benefit afterward from the acquired skills.Why Is the Dual System Not Readily Transferable?The dual VET depends on some essential preconditions. For instance, it relieson strong cooperation between government and employers to develop theVET institutional framework, to design and adjust curricula, to certify competences,and to co-fund the plant-based and school-based elements. In additionto these regulatory and budgetary issues, the dual system depends on sustainedand active support from a sufficiently large number of actors, such as:1. Trade unions must accept that apprenticeship contracts have lower paymentscompared to regular contracts;2. Employers must be willing to provide training (not in an informal mannerbut according to occupational curricula), to send apprentices tovocational school leading to certified occupational qualification, and toprovide them with a credible prospect of sustainable employment;3. Government must provide for vocational schools and teachers and alsofor preparatory training for young people who fail to enter apprenticeships;and4. Youth and parents must accept VET as a solid alternative to academiceducation.These elements tend to be mutually reinforcing. As they have developedover a long time, these conditions cannot be readily transplanted across differentinstitutional and historical contexts. However, many countries havetried to develop dual VET programs. For example, in the United States,both the National Youth Apprenticeship Act under the administration ofGeorge H. W. Bush and the School-to-Work Opportunities Act under PresidentWilliam Clinton were attempts to implement the dual system. Accordingto Lerman and Rauner (2012), however, widespread participation in theyouth apprenticeship could not be reached because of 1) the inability ofemployer organizations to coordinate long-term training plans; 2) the federalistdivision of responsibilities that impedes a binding national frameworkfor the training systems; 3) a general mistrust in the idea of impartingspecific human capital, as it is likely perceived to lose its value more quicklyin a continuously changing labor market (Krueger and Kumar 2004); and4) a lack of employer interest in participating in this exchange. Despite thefutile efforts at the federal level, some states were able to establish and maintaina functioning small-scale dual apprenticeship system, particularly in theconstruction industry (Bilginsoy 2003).Complementary to the previous analysis outlining the incentives of firmsto provide training, the quality of the training must be of a sufficiently highlevel to ensure that students are willing to participate in apprenticeshiptraining. Acemoglu and Pischke (2000) highlighted the existence of externalcertification of training content that increases the value of training in324 ILR Reviewthe overall labor market, and hence the willingness of students to invest ahigh level of effort during the apprenticeship. At the same time, Dustmannand Schönberg (2012) pointed out that the external certification andoccupation-specific binding standards for the content of training are importantcommitment devices for firms to invest in high-quality training. In theabsence of these two conditions, firms may exploit students as cheap laborers,which thus reduces the willingness of students to participate in trainingand lowers the reputation of apprenticeship training in general. Dustmannand Schönberg (2012) suggested that the abolishment of mandatory, externaltraining boards in the United Kingdom in the 1980s, which centrallydecided on the training content, was responsible for the decline of the relevanceof the UK apprenticeship system. This trend further highlights theneed for a specific institutional framework when aiming to establish a mainstreamdual VET system, since it is not easy to replicate its complexity.Empirical EvidenceIdentification ProblemsIs school-based vocational training as effective as general-based education?How useful are apprenticeships in helping youth transition into the labormarket? How does the dual system compare with general-based educationor other types of vocational training? Which type of VET best prepares workersfor the labor market? Researchers have attempted to answer some ofthese questions for different countries and here we summarize the findings.As will become apparent, no easy answers resolve these questions given variationacross and within countries and studies. Countries’ institutional andcultural differences, as well as the available amount of information on workers,jobs, and labor market characteristics in the data sets used explain somedifferences, yet several identification problems within the literature are difficultto overcome.Most of the literature compares the employment outcomes of VET studentswith an alternative group, namely general-based education students,other VET tracks, school dropouts, or college graduates in the same country,after controlling for all observable characteristics available. However, weacknowledge that unobserved heterogeneity may still prevail given that youthdeciding to study VET may have different abilities, tastes, and preferencesabout work from those who choose an alternative education system or noeducation. If unobserved quality differences occur between both types ofyouth, results from cross-sectional studies will reflect an omitted variablebias. For instance, given that VET is frequently intended for youth with lowermotivation and ability than those who pursue general-based education, noncausalestimates of the returns to vocational education relative to generalbasededucation will be downward biased (Willis and Rosen 1979; Tuma1994; McCormick, Tuma, and Houser 1995). By contrast, the opposite islikely to be true when comparing students from vocational education toschool dropouts. Furthermore, a related concern arises due to differentVocatio nal Educatio n And Training In Industrialized Countries 325occupations requiring diverse mixes of academic and practical skills. If youthself-select into various occupations based on their skills, evaluating the effectivenessof the differing systems becomes a difficult task given that theemployment patterns, payment structures, and union coverage in the occupationsthemselves may not be comparable.Unable to exploit exogenous changes in the institutional setting, the majorityof country studies conduct descriptive analyses controlling for students’characteristics; this is to capture the expected opportunity cost of the alternativeforms of schooling, including grades and test scores achieved prior toaccessing VET or remaining in general education, family background, andlocal economic conditions. Additional confounders include subjective statementsof preferences for VET or academic studies (Bishop and Mane 2004),subjective self-assessments of ability (Hotchkiss 1993), and information concerningthe vocational orientation of the school captured by full-time vocationalteachers and the schooling choice of previous cohorts (Meer 2007).In addition to the aforementioned problems, one has to add measurementissues in studies comparing the effectiveness of two types of VET systemsacross countries. Indeed, the covariation of other relevant institutionalfactors, the absence of a unified framework for defining the respective trainingoptions, as well as the difference in data collection and quality frequentlybias cross-country studies analyzing the relative effectiveness of school-basedVET and the dual system (Hoeckel 2008). In an attempt to avoid this problem,some studies exploited the two systems’ coexistence within countries toevaluate their relative effectiveness. However, in most countries one systemprevails over the other, and the reason for that is likely correlated with thelabor market structure, thus adding yet another source of endogeneity.One way to address the selection problem is to exploit some exogenouschange that lengthens or shortens one educational system compared to theother. For instance, several researchers have exploited institutional changesincreasing the duration of general schooling in the vocational schoolingtracks of those respective countries (Oosterbeek and Webbink 2007; Pischkeand von Wachter 2008; Hall 2012; Felgueroso, Gutiérrez-Domènech, andJiménez-Martín 2014), whereas others have used an instrumental variableapproach (Fersterer, Pischke, and Winter-Ebmer 2008). Furthermore, analternative way to address the endogeneity is to use propensity score matchingthat addresses the selection problem (Lee and Coelli 2010) or, even better,conduct randomized controlled experiments designed before the VETprogram implementation (Díaz and Jaramillo 2006; Attanasio, Kugler, andMeghir 2011; Card et al. 2011). The concerns with randomized controlledexperiments are their external validity and their costs.Evidence of Vocational and Technical Secondary SchoolsRigorous quantitative evidence on the returns to school-based vocationaleducation is scarce primarily due to the lack of informative data. Most countriesexperience a negative selection into vocational schooling tracks,326 ILR Reviewleading to a systematic underestimation of vocational training effects whenthe selection issue is unaccounted. Here we review some of the existing evidenceon the relative benefits of participating in vocational schooling relativeto general schooling. We thereby focus on studies that aim to controlfor the selection. Clearly, however, the lack of evidence based on randomvariation is quite unfortunate and raises accountability concerns, as discussedearlier.Overall, the evidence described below indicates that youth completingschool-based VET do as well (and sometimes better) than if they had insteadremained in purely academic studies (Tansel 1994, 1999; Mane 1999; Tunali2002; Bishop and Mane 2004, 2005; Meer 2007). Some evidence found thatschool-based VET is most efficient when the area of vocational training ismatched with the occupation of employment, whereas no significant differencesarise for unmatched groups (Neuman and Ziderman 1991, 1999).Additionally, it is efficient when offered to low-ability individuals and tothose who work in lower skilled jobs (Dearden, McIntosh, Myck, andVignoles 2002).A number of studies provided evidence on labor market returns to vocationalcurricula in the United States, showing a positive effect in the short tomedium run. They also found that for later cohorts, returns to attendingtechnical schooling have increased over time. While Hotchkiss (1993) foundno return to vocational schooling on employment and wages of high schoolgraduates in 1980, even after controlling for training-related occupationchoice, Mane (1999) identified differences in the returns to vocationaltraining of high school graduates who do not attend college during the1970s, 1980s, and 1990s, finding a positive trend over time. Whether thistrend was due to increasing quality in education or to increasing demandfor these skills remains unclear. The positive wage and employment effectsof participating in the vocational track were confirmed by Bishop and Mane(2004) using data from the National Education Longitudinal Survey of1988, and by Bishop and Mane (2005) using high-school transcripts. Theynoted that a growing need for these types of skills during the 1980s and1990s most likely explained the increasing returns to vocational training inthe United States. They used a multinomial logit selection model to accountfor self-selection in track choice, and found that those on the technical oracademic track are best off following the path they chose, suggesting thatVET provides a valuable alternative for youth aiming to work in technicaloccupations.Using data on high-school qualifications in Israel, Neuman and Ziderman(1991, 1999) found that school-based VET yielded higher returns thangeneral schooling, but only when the occupation of the VET and the occupationof employment are matched. For cases in which the occupation oftraining and employment are matched, the authors estimated that vocationalhigh school graduates earned between 8 and 10% more than thosewith solely academic qualifications. No significant earnings differencesarose between vocational high school graduates with unmatched jobs andVocatio nal Educatio n And Training In Industrialized Countries 327academic high school graduates. The probability of finding a matchingoccupation varied substantially across occupations. Taking the average of37.5% indicated that the overall wage gain of the vocational occupation wasstill at 3%.Some studies provided evidence of the differential rates of return to vocationaleducation. After using a variety of data sets, accounting for the timetaken to acquire various qualifications and controlling (when possible) forability bias and measurement error, Dearden et al. (2002) found that thereturns to UK school-based vocational education varied with the type ofqualification obtained. These authors found that the returns to academicqualifications were higher if individuals subsequently acquired a skilledrather than an unskilled job. Heterogeneity also occurred among individuals’ability. The returns to vocational qualifications were significantly higherfor low-ability individuals. In a different setting, Tansel (1994, 1999) andTunali (2002) found differential returns to vocational training (relative togeneral schooling) by gender in Turkey. Controlling for the differentialselectivity into the choice of tracks, they found that women who participatedin vocational education benefited from a higher employment probability,while men experienced higher wages. Furthermore, women seemed to benefitpredominantly in urban areas, while males benefited in both rural andurban settings, suggesting that females faced participation constraints inaddition to educational ones.It is interesting to note that recent studies that exploited a reform toidentify the effectiveness of school-based vocational training relative to generaleducation did not find any effects of increasing the general educationfor students in the vocational training track by one year. Oosterbeek andWebbink (2007) investigated the increase in duration of the vocationalschooling track in the Netherlands in 1975 by one year, with the additionalyear designated only to general schooling. Adopting a difference-in-differencestrategy, they analyzed the effect of the change on wages 20 years later anddid not find any effect. Most recently, Malamud and Pop-Eleches (2011)evaluated a Romanian reform that postponed the tracking of students intovocational and academic schools. Using a regression discontinuity design,they found no effects of this reform on university completion, labor marketparticipation, or earnings. Pischke and von Wachter (2008) exploited thegradual adoption of a one-year increase in compulsory schooling in the lowestschooling track in Germany between the 1950s and 1970s to study itseffects on long-term wages, and likewise found no effects of the policy.Hall (2012) assessed a policy change in Sweden in 1991 that increasedthe duration of general education content of the vocational schooling at theupper secondary level by one year, after which students were eligible toenroll in tertiary education. Exploiting random differences in time and theregional implementation of a policy pilot, Hall did not find any effects onsubsequent study take up, nor any increase in the wages earned up to 16years after the beginning of upper secondary school. She found, however,328 ILR Reviewthat low-achieving students were significantly more likely to drop out ofupper secondary education.Using an instrumental variable approach, Cappellari (2004) assessed differencesin early labor market outcomes for participants in vocational orgeneral secondary schooling in Italy. Observing that the selection into therespective tracks was strongly related to parental background and ability, heused grandparents’ school participation as an instrument, arguing that thisis exogenous to the pupil’s labor market outcomes (after controlling forparental characteristics) but relates to the decision on whether to select intogeneral or vocational schooling. He found that participating in the vocationaltrack increased the early career employment and labor market participationrates, while general schooling increased the probability of attendinguniversity. Unfortunately, the study analyzed only short-term effects. Aninteresting French study estimated both short- and long-run effects of vocationalversus general schooling tracks (Margolis and Simonnet 2003). Controllingfor non-random selection using a Heckman selection correctionmodel, these authors found that technical education had a similar effect asgeneral education on the speed of entry into the first job. However, theyfound that five years after entering the labor market, youth with lower levelsof vocational schooling earn less than those who graduated from the academicschooling track. They further found that one channel through whichparticipants of the lower- or medium-level vocational schooling track experienceda fast entry into employment was the increased probability of findingthe first job via social networks—although, this network effect fadedover time.Evaluating ApprenticeshipsApprenticeships seem to improve both social and occupational skills ofapprentices (Rose 2004; Halpern 2009), yet rigorous quantitative evidenceon their effectiveness is meager, even in countries where apprenticeshipsare widespread (Lerman 2013). Overall, studies indicate apprenticeshipeffectiveness varies with the counterfactual to which they are compared.When compared to other types of VET or post-school study, it seems thatapprenticeships work better than the alternative (Bonnal, Mendes, andSofer 2002; McIntosh 2004, 2007; Lee and Coelli 2010; Alet and Bonnal2011).McIntosh (2004) analyzed the returns to apprenticeships in the UnitedKingdom prior to the 2004 reform. Using the 1996–2002 Labour Force Survey(LFS), he found that while completing an apprenticeship increasedmales’ wages by around 5 to 7% (controlling for other qualifications heldand personal characteristics), it had no effect for women. He also foundsectoral differences, with higher returns among men working in manufacturingindustries rather than in the service sector. Most recently, McIntosh(2007) evaluated the government-funded apprenticeships established inthe United Kingdom in 2004. Using Labor Force Survey and OLS estimates,Vocatio nal Educatio n And Training In Industrialized Countries 329he compared the effectiveness of these apprenticeships to other types ofvocational qualifications in the United Kingdom. He found that in 2004–2005, individuals who completed apprenticeships earned around 18% moreat Level 3 and 16% more at Level 2 than individuals whose highest qualificationis at Level 2, or at Level 1, respectively. As McIntosh acknowledged,however, these estimates may be biased because employers may select thebest applicants, as there is excess demand for apprenticeships.According to Lerman (2013: 12), “few rigorous studies have examinedhow entering and completing apprenticeships in the United States affectsthe education, job skills, non-academic skills, and job market outcomes ofyoung people.” Orr (1995) analyzed the effects of participating in a Wisconsinyouth apprenticeship in printing and found that apprentices earnedsubstantially higher earnings than those of a similar age. Ethnographic evidencefrom 24 programs involving nearly 500 apprentices—with more than300 hours of observation and more than 90 interviews with adult mentors,staff, program directors, and students—suggested that apprentices learnboth noncognitive and occupational skills (Halpern 2009). Noncognitiveskills included problem solving, self-confidence, teamwork, discipline, andthe ability to take direction and take initiative, among others. Similarly, Rose(2004) found that apprentices learn from their mentors and aim at masteringan occupation and becoming part of a community practice.Lee and Coelli (2010) analyzed the labor market returns to vocationaleducation in Australia using propensity score matching methods and foundsubstantial differences for individuals who completed 12 years of schoolingand those who did not. While the effect of participating in VET on wagesand employment probability was zero or even negative for the first group, itwas significantly positive for the latter group. This finding is in line with previousliterature, suggesting that vocational education options seem to providea safety against low labor market attachment.Bonnal et al. (2002) studied the relative performance of apprenticeshiptraining versus school-based training in France. Correcting for the negativeselection of youths into apprenticeships, they found that apprenticeshipsperform significantly better in integrating youths into their first employmentrelationship. This advantage faded over time and was not associatedwith higher wages. In addition, a recent study by Alet and Bonnal (2011)showed that young people integrated into the apprenticeship system ratherthan vocational schooling in France were more likely to successfully completetheir final exam and undertake further education.One of the first studies to use an instrumental variables (IV) approach tomeasure the returns of apprenticeships was that of Fersterer et al. (2008)using Austrian data from 1975 to 1998. These authors exploited the differentlengths of apprenticeship periods completed for a group of apprentices infailed firms. Perhaps surprisingly, they found that the estimated returns forapprentices affected by the firm failure were low, at around 2.6%. Thesereturns were not very different from the OLS returns in the same sample, suggestingthat the selection problem was not particularly important in this case.330 ILR ReviewEvaluating the Dual SystemAs with apprenticeships, the dual system seems to outperform other types ofvocational schooling; but in this case, the benefits focus on employmentopportunities, as opposed to earnings, and are concentrated at the beginningof individuals’ professional lives (Winkelmann 1996; Plug and Groot1998; Parey 2009). In addition, recent causal estimates of the returns to dualtraining find no differences in wage returns relative to the academic track(Krueger and Pischke 1995; Winkelmann 1996; Fersterer and Winter-Ebmer2003; Pischke and von Wachter 2008).An extensive area of research exploits the coexistence of the dual VETsystem and other types of vocational schooling within countries to infertheir relative effectiveness, and more specifically, the relevance of firmspecificskills. For the case of Germany, studies by Winkelmann (1996) andmore recently Parey (2009) showed that participation in the dual VET hada particular advantage compared with other options of the vocationalschooling system since it improved early labor market attachment andshowed a faster and more structured integration into the labor market. Thisadvantage faded over time though as other education participants found afoothold in the labor market. Furthermore, these studies showed that thefast initial transition did not hinge on finding employment in the trainingfirm, suggesting that firm-specific skills did not play a major role in the Germanapprenticeship system. Investigating wage differentials, Parey (2009)did not find any significant differences in return to the training options inthe early working life. Studies regarding the performance of apprenticeshiptraining versus school-based training by Plug and Groot (1998) showed similarresults for the Netherlands.When comparing the dual system with purely academic studies, severalpapers have found that wage returns to apprenticeship training on wages inGermany and Austria range between 15 and 20%, based on ordinary leastsquares (OLS) estimates (see Krueger and Pischke 1995; Winkelmann 1996;Fersterer and Winter-Ebmer 2003). Given that dual vocational training lastsaround three years on average, this implies a return of approximately 5% ayear, which is not far from other forms of school-based education. Selectioninto the dual system, however, once again raises concerns that OLS wageestimates will be biased (Soskice 1994). In particular, Soskice found that muchheterogeneity was due to firm size, given that the wages for apprenticeshiptrainedworkers strongly increase along with the training firm size.Recently, Adda, Dustmann, Meghir, and Robin (2006) used a structuralapproach to compare the career path of apprentices relative to unskilledworkers (pure on-the-job training). They modeled the entire career path,starting with the original apprenticeship choice and following period-byperiodemployment transitions, job mobility, and wages. Using 15 years ofGerman data, they found that apprenticeships led to more wage growthupfront, while wages in the pure on-the-job (unskilled) training grew at alower rate but for a longer time. Overall, they found that wages were higherVocatio nal Educatio n And Training In Industrialized Countries 331following an apprenticeship qualification, with the job arrival rates veryhigh and destruction rates very low after some years of experience. Thesefindings contrast with Heckman’s (1993) suggestions that qualified apprenticeswere harder to reallocate following a job loss.Hanushek, Woessmann, and Zhang (2011) also analyzed the life-cycleemployment patterns of people with varying educational backgrounds usingdata on the labor market experiences of individuals at various ages in 18OECD countries, collected in the mid-1990s as part of an OECD-sponsoredventure. They found a higher initial employment rate for vocational educationparticipants at labor market entry, which reversed by the age of 50. Theseresults suggest that occupation-specific knowledge quickly becomes outdatedand thus leads to lower employment opportunities later in life. Nonetheless,we need more reliable evidence concerning the perceived trade-off sinceboth occupation-specific labor market segregation as well as limited longtermpanel data impede the causal interpretation of these findings.Conclusion and Policy PerspectivesIn this article, we have classified vocational education and training (VET) inindustrialized countries into three distinct systems: 1) vocational and technicalschools, 2) formal apprenticeships, and 3) dual apprenticeship systemscombining school training with a firm-based approach. After reviewing theparticular strengths and weaknesses of these distinct types, we evaluated theempirical evidence on their effectiveness. Beyond the general educationcore, youth completing school-based VET do as well (and sometimes better)than if they had instead remained in purely academic studies, especiallywhen a match can be made between the vocational training and the futureoccupation of employment. Rigorous studies evaluating the effectiveness ofvocational training show that vocational training makes the transition togainful employment easier and may improve wage and employment outcomes,in particular for low-ability youths and those working in low-skilljobs. In several settings, an extension or prolongation of the academicschooling for these youth does not result in additional gains in terms oflabor market entry, but instead may entail an increased risk of dropout.Comparing across types of VET, the dual system, which is most prominent ina number of continental European countries, is more effective than alternativeacademic or training education at helping youth transition into employment,though no wage differences are observed. Hence, it seems fair to saythat vocational training elements generate some added value both to trainingemployers and to the trainees, and facilitate the timely entry into morestable and better-paid jobs at the beginning of the working life.Yet, given that economic and institutional conditions are highly diverseacross industrialized countries, when it comes to furthering vocational educationand training, policymakers need to take into account the resourcesavailable and to build on them. The ideal type of a dual VET model relieson three preconditions:332 ILR Review1. Support from employers (and their associations). Employers and theirassociations would benefit from considering training to be an investmentin favor of competitiveness, productivity, and sustainable employmentprospects, and thus could offer vocational training in a systematic andcertifiable fashion.2. Support from young people, their families, and trade unions. Young people,their families, and trade unions would benefit from acceptingapprenticeships as a phase of lower earnings in exchange for skill acquisition.This perspective would ensure that apprenticeships are not seen asa second-best alternative to tertiary education.3. Support from the government. The government would benefit, even ifindirectly, from providing vocational schooling, including funding, abinding regulatory training framework (agreed with employers), andexternal monitoring. Such an approach would ensure the timely adaptationand labor market relevance of the curricula, and that the qualitystandards of training provided within firms are met.Governance and the involvement of core actors—in particular governmentat different levels, employers’ associations, and unions—play a crucial role inimplementing dual VET. The organizational capacities of governments andsocial partners are essential, given that a critical mass of supply and demandof dual VET cannot be created artificially and needs time to develop.This level of buy-in and involvement explains why a complex system such asthe dual vocational training has not been transplanted at a significant scaleoutside continental Europe. But given that most countries have some formsof vocational training—school-based, firm-based, or mixed—governmentsand social partners can in principle start with those elements and reform theirsystems to bring VET closer to employer and labor market needs. Experienceswith pilot projects, regional or sectoral clusters of employers, or traditionalapprenticeships can be instructive. The main challenge is to make on-the-joblearning more systematic and to bring school-based vocational training orgeneral education closer to labor market needs. In this respect, employer participationand an increase in systematic vocational training are crucial. Hence,elements of dual VET closer to employers’ demand and real-work experiencecan be developed within other types of VET.For example, if a number of employers in a given region or sector areable to identify a joint interest in dual VET as a way to promote the productivityof their workforce, it could be realistic to start with a dual VET cluster.This would probably entail support from the government, which wouldneed to take a supporting role regarding vocational schooling parts andinitial employer investment in training capacities. The government wouldpartake in such an exchange for the expectation of lower youth unemployment.A basic agreement regarding funding, management, and curriculacould be a good starting point in such a case.Vocational education and training, however, should not be seen as a panaceato combat high youth unemployment. Keep in mind that VET systemsVocatio nal Educatio n And Training In Industrialized Countries 333are appropriate to prepare young workers for only certain types of jobs.VET may be less appropriate for specific high-tech sectors and to access thehighest managerial level positions in both the public and private sectors.Here, general academic training is certainly relevant. To address the problemof rising youth unemployment rates since 2008, VET is complementaryto structural reform policies that help revive the economy and reduce entrybarriers to employment such as dismissal protection or minimum wages.Improving VET systems remains relevant even if structural and institutionalchanges need to interact with attempts to increase certain types of jobopportunities (Cahuc, Carcillo, Rinne, and Zimmermann 2013).But other elements may be equally important to creating labor marketconditions that are more conducive to a smooth transition from school towork. In this context, along with the strengthening of vocational training,the highly dualized structure of labor markets observed in countries such asItaly, Spain, and France needs to be addressed. Where a strong divide occursbetween employment protection for permanent contracts on the one hand,and the regulation of temporary contracts or self-employment on the other,young people typically remain stuck in fixed-term employment spells or inother forms of flexible employment. Employers are very reluctant to hireyouth on a permanent basis, particularly in the absence of vocational training.In this respect, reducing the rigidity of dismissal protection whileincreasing employment security for labor market entrants according to tenurecould be a solution. Practical work experience and training could thenfurther ease the successful integration of young people into stable jobs.Finally, a recent line of research has focused on studying the life-cycleimpact of vocational education, motivated by the returns to vocational trainingpotentially varying at labor market entry compared to returns afterspending several years in the labor market. The differences lie in the factthat skills have to adapt to technological change and to be mobile acrosstime, firms, occupations, and space. While some studies so far support theconjecture that general education still provides a more solid base for suchadjustments (Hanushek et al. 2011), others suggest that vocational trainingis better than pure on-the-job (unskilled) training (Adda et al. 2006). However,the long-term counterfactuals of low-skilled individuals with general orvocational education considering the risk of early unemployment have notyet been well investigated. 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