Simon Field, Senior Analyst, OECD Directorate for Education and Skills, on the relationship between qualifications and skills
After all, they are just pieces of paper with fancy script and impressive-looking designs, and employers are surely interested in what people can actually do – their skills – rather than pieces of paper? A new OECD study, entitled Building Skills for All, A Review of England casts a spotlight on this question.
Qualifications are useful because they make skills visible. It is confidently assumed that the holder of a school-leaving certificate can read and understand instructions, and make calculations, and that those with university degrees can do much more. This confidence allows employers and others to decide how to make the best use of the skills of the labour force.
Giorgio Brunello and Lorenzo Rocco from the University of Padova look at the benefits and costs of academic and vocational education over the long-term.
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Education economists often point out that individuals with a vocational education face a trade-off between short term benefits and long term costs. In the short term, this type of education facilitates the transition from school to work by providing ready to use skills. In the long term, however, vocational skills may depreciate relatively fast and individuals who specialize in these skills may be less capable of adapting to technical change than individuals endowed with a more general (academically oriented) education.
The view that the labour market benefits of vocational education are short lived has been recently supported by Hanushek, Schwerdt, Wossmann and Zhang (2015), who compare the life cycle patterns of employment (and wages) for individuals with vocational and academic education using cross-sectional data from the International Adult Literacy Survey (IALS). Since IALS does not allow to follow individuals over time and to distinguish between age and cohort effects, their estimates rely on the assumption that age - employment and age – wage profiles do not vary across cohorts, so that today’s old people in each education category are a good proxy for today’s young people when they will become old. What this literature does is compare someone’s wage with a vocational education at age 50 with the wage of someone holding a vocational qualification aged 30 in the same year, and assumes that today’s 30 year olds will fare in 20 years’ time like today’s 50 year olds. But it is possible that today’s 50 year olds do quite differently because the labour market they entered was very different or because the composition of the older labour force (e.g. in terms of qualifications) is quite different than among the younger cohorts. This makes it difficult to infer the true effects of vocational education by comparing older and younger workers.
