Finding the Right Track: Payoffs to Vocational Education Programs with Workplace Learning

Abstract Workplace learning in vocational education and training (VET) is often claimed to be an important metric to define “high-quality” programs, but outcomes beyond initial employment are not well understood. In this study, we estimate outcomes of upper-secondary-school VET programs with different levels of workplace learning in Australia—solely classroom-based, classroom-based with a workplace learning component, and training with an employment contract (apprenticeship/traineeships). Outcomes of students in each of these vocational programs are compared with outcomes of students who do not enroll up to seven years later. We use data from 2003, 2006, and 2009 Program for International Student Assessment participants who are tracked through an annual survey, adjusting for differences in student test scores, socioeconomic characteristics, post-secondary aspirations, and school and peer characteristics. Our results suggest short-term labor market benefits that disappear by year 7 out from school. However, among those who go onto further study after school, VET with workplace learning is associated with positive outcomes that persist to at least year 7. These include 5 to 10 percentage point higher rates of full-time employment, 7 to 10 percentage point higher reported rates of career job attainment, and 0.14 standard deviation higher job satisfaction. Suggestive evidence indicates that workplace learning may provide job market information and/or employer contacts that help students find good post-secondary pathways in education and training.