Do BTEC qualifications pay?

London Economics' Pietro Patrignani with a closer look at BTEC qualifications

BTEC qualifications are career-based qualifications and can be taken at different levels of the Regulated Qualification Framework (RQF) between Level 1 to Level 5 and above. BTECs at Levels 1 to 3 are normally taken at Further Education Colleges or schools, while BTEC qualifications at higher levels are available at FE colleges and Higher Education Institutions. While BTECs are specialist work-related qualifications, they are college based and not work-based learning qualifications (such as NVQs and Apprenticeships). BTECs account for a significant share of those with Level 3 vocational qualifications: for example, they account for 47% of young men and 30% of young women who have Level 3 vocational qualifications as their highest qualification (excluding Apprenticeships). 

Our recent research published in the CVER Discussion Paper 007 used the Longitudinal Education Outcomes (LEO) data to estimate the earnings differentials associated with a range of technical and vocational qualifications for young people. This showed the earnings differential associated with qualifications when they are the highest level attained by a young person. A positive earnings differential can reflect both higher wages and higher hours of work. Our analysis showed that, while for NVQs and Apprenticeships there were positive and strong earnings differentials for men and women, for BTECs this was only true for women. For men, there was no significant effect from having BTECs as the highest qualification. This is in contrast with typical evidence from the Labour Force Survey: findings using historical data have usually shown positive wage differentials for BTECs for both males and females at all levels of the Regulated Qualification Framework (RQF). While the LFS uses survey data referring to a sample of working age individuals (16-64), analysis using LEO is based on information from matched administrative data sources for a group of young learners who recently went through the English educational system, with labour market outcomes measured at the age of 26. As a result, part of the difference in the estimates is driven by age, as shown in CVER Discussion Paper 009.

We have followed on from this work by investigating BTECs in far more detail. This is the subject of our most recent briefing note.

Personal characteristics and labour market outcomes

We first investigate the characteristics and labour market outcomes for the group of learners in possession of BTECs and other vocational qualifications, with a particular focus on Level 2 and 3 qualifications. 

In terms of personal characteristics and further education attainment the key findings show that, compared to NVQs and other vocational qualifications:

• The average level of prior attainment (measured at the ages of 11 and 16) is substantially higher for both men and women undertaking BTECs compared to other vocational routes. 

• A higher proportion of learners holding BTECs are from BAME backgrounds (non-white British), and this is true for both males and females across all levels.

When looking at further study and attainment at higher levels, BTEC qualifications at Level 3 and Level 2 often act as a stepping stone for further study and education for both males and females:

• Between 40% and 45% of learners with BTECs at Level 3 attain degree-level qualifications or above, compared with between 5% and 8% for Level 3 NVQs and 20% and 25% for other vocational qualifications at Level 3. 
• At Level 2, the percentage of BTEC holders achieving at Level 3 qualification or above is in excess of 50%, with 15% attaining at least degree-level qualifications or equivalent. The corresponding proportions for NVQs at Level 2 are considerably lower, and slightly lower for ‘other’ vocational qualifications.

Earnings differentials

We then estimated earnings differentials for BTECs and other vocational qualifications using a variety of counterfactual groups (including results from the Labour Force Survey restricted to younger people). The main findings indicate that: 

• For males in possession of Level 3 BTECs as their highest qualification, we failed to observe positive earnings differentials compared with individuals achieving at the qualification level immediately below. However, the earnings differentials turn positive if we restrict our attention to individuals holding Level 2 BTECs or individuals enrolling in Level 3 BTECs but failing to achieve. 
• For Level 2 BTECs there is little evidence of positive earnings differentials, while the estimates for other Level 2 vocational qualifications are more often positive.
• For females, earnings differentials for both Level 3 and Level 2 BTECs are positive and strong, and more consistent across the different specifications. They typically range between 10% and 15%, and are slightly larger than the estimated earnings differentials for other vocational qualifications at the same level.

Although the analysis using the administrative data did not show positive earnings differentials for males compared to individuals at the level immediately below of the RQF, it would not be reasonable to interpret this as evidence that the qualification does not add any skills or proficiencies that are valued in the labour market. This is because BTECs often enable learners to progress and attain at higher levels. Indeed they are the main vocational route to higher education and equivalent qualifications.

Furthermore, earnings differentials are positive in some specifications and it might be the case that earnings differentials become higher in later years (as reflected in the LFS estimates), as we are considering estimates for young people within a relatively short time of leaving the education system.
--------------------------------------------------------------

"Further analysis of the earnings differentials associated with BTECs", Pietro Patrignani, Sophie Hedges and Gavan Conlon, CVER Briefing Note 006 (February 2018) is available at http://cver.lse.ac.uk/publications/default.asp