Meet the need – the role of vocational education and training for the youth labour market

Abstract To combat negative trends in the youth labour market, policymakers around the world support vocational education and training (VET) programmes. This paper investigates how enrolment rates in upper‐secondary education programmes – general education, school‐based VET and dual VET – affect ten youth labour market indicators on integration and job quality. We run first‐difference generalized method of moments regressions on panel data of 36 countries for 2004 through 2014. We complement the existing literature by dealing with unobserved heterogeneity across time and reverse causality and by analysing non‐linear effects that might arise due to general equilibrium effects. Our findings show that school‐based VET and dual VET have different effects: school‐based VET's effect on the labour market depends on the outcome indicator and country, whereas dual VET overall improves both labour market integration and job quality. Depending on the labour market indicator, we find evidence for both linear and non‐linear effects. In educational reforms, policymakers should therefore consider the non‐linear and heterogeneous effects of VET.