Skilled workers' vocational identity is a crucial component of the German workforce, central to its ability to remain successful in an era of unprecedented global competition, because of its effects on vocational capacities, skill performance, and quality (Rauner [1999]; Skorikov and Vondracek [2007]).
Conditional on Z, the effect of vocational education on Y is given by (upalpha _0 +alpha _1).
We therefore take a more modest route and focus only on the gross (or total) effect of vocational education on labour market outcomes.2.2
Ideally, the causal effect of vocational education on outcomes can be identified if the individuals were randomly assigned to vocational or academic education.
In the course of this project, a positive effect of vocational education on economic knowledge was confirmed (Brückner et al. 2015; Zlatkin-Troitschanskaia et al. 2015).
Other research using the PIAAC data investigates among others the effect of teacher skills on student achievement (Hanushek et al., 2014), the role of skill mismatch for earnings (Levels et al., 2014; Perry et al., 2014), skill depreciation over the lifecycle (Barrett and Riddell, 2016), and the effect of vocational education on lifecycle employment (Hampf and Woessmann, 2016).
Second, the differential effect of vocational education depends on the quantity, quality and market value of the skills and competences that vocational and academic education contribute to accumulate (the direct effect) but also on occupational alternatives and, more in general, on the opportunities that the two types of schooling open up to the students later in their lives (the indirect effect).
Therefore, the evaluation of the differential effect of vocational and academic education on these outcomes cannot rely on the simple comparison of average outcomes across individuals with different education careers.
In this section we examine the effects of vocational education on labour market outcomes.
