No experience, no employment: The effect of vocational education and training work experience on labour market outcomes after higher education

Abstract

Higher education graduates with work experience enter the labour market more smoothly. This study analyses how work experience from vocational education and training (VET) affects labour market outcomes after higher education. To account for selection into VET, we use the regional enrolment rate as an instrument for upper-secondary VET. Results suggest that work experience gained during VET leads to significantly higher wages of 7% to 19% one year after graduation from higher education and two months less search time for first employment but does not significantly lower the probability of an internship in the post-graduation year. However, these positive effects do not persist: the effect is no longer robustly significant for wages, unemployment or employment position after five years. The effect operates through the human capital (specific and general), screening and signalling channels, not the social network channel. Our results suggest that upper-secondary VET is an equivalent pathway to academic education, not merely the second-best, for individuals planning on higher education.