Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/181314 
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper No. 7114
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
How skills acquired in vocational education and training (VET) affect wages and employment is not clear. We develop and estimate a search and matching model for workers with a VET degree. Workers differ in interpersonal, cognitive and manual skills, while firms require and value different combinations of these skills. Assuming that match productivity exhibits worker-job complementarity, we estimate how interpersonal, cognitive and manual skills map into job offers, unemployment and wages. We find that firms value cognitive skills on average almost twice as much as interpersonal and manual skills, and they prize complementarity in cognitive and interpersonal skills. The average return to VET skills in hourly wages is 9%, similar to the returns to schooling. Furthermore, VET appears to improve labour market opportunities through higher job arrival rate and lower job destruction. Workers thus have large benefits from acquiring a VET degree.
Subjects: 
occupational training
vocational education
labor market search
sorting
multidimensional skills
JEL: 
E24
J23
J24
J64
Document Type: 
Working Paper
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