Göttingen, September 26th 2007 Leading House « Economics of education » « Transitions, skills...

Göttingen, September 26th 2007

Leading House « Economics of education »

« Transitions, skills and labour market »

Göttingen, September 25th- 28th - Research on Vocational Education and Training for and as International Comparison

Jean-Marc Falter – Yves Flückiger


Introduction Taking a labour market perspective, our Leading

House endeavours to analyze the determinants and the impact of vocational education in Switzerland

Our research activity started in September 2006 We cover three research themes: Transitions from school toward the labour market Workers’ skills Firms behaviour with respect to vocational

education and lifelong training


Outline of the talk1. Research projects: overview and goals2. Skills and the labour market:

a. Employer learning: does widespread apprentice education change the picture?

b. The content of education: what enhances worker success?

3. Research agenda


1. Research People and institutions University of Geneva• Prof. Yves Flückiger: Director• Prof. Siegfried Hanhart• Dr. Jean-Marc Falter Geneva School of Business Administration• Prof. José Ramirez:


1. Research Approach We take a biographical approach: mandatory

education, transition toward post-secondary education, labour market entry and labour market outcomes

We exploit readily available database: PISA, TREE (TRansition to Education and Employment), ALL (Adults literacy and lifeskills survey)

We are producing our own data with respect to firms’ behaviour

Micro-econometric studies


1. ResearchA. School to work transitions (1/2) The performance of the schooling system

has often been assessed by means of standardized cognitive tests (PISA)

However, the performance of the schooling system goes well beyond these measures

It must provide the labour market with the required skills and ensure a smooth transitions to the labour market


1. ResearchA. School to work transitions (2/2) We analyze the capacity of the Swiss schooling

system to ensure smooth transitions inside the schooling systems (transitions towards post-mandatory education)…

… as well as transitions towards the labour market We put a special emphasis on economic variables

affecting these transitions such as unemployment, labour market structure

Building up on the literature, we also look into the impact of changing tasks on the workplace on the demand for apprentice


1. ResearchA. School to work transitions : papers and

publications M. Meunier (2006) "Fonctions de production éducationnelle:

le cas de la Suisse", Swiss Journal of Economics and Statistics, 142 (4), pp. 579-615. (version "working paper": LH Working paper no. 06_03)

M. Meunier, (2007) "Are Swiss Secondary Schools Efficient?" à paraître dans Governance and Performance of Education Systems, Nils Soguel et Pierre Jaccard (eds), Springer.

M. Meunier, (2007), "Les effets des externalités de proximité sur l'(in)efficience des écoles secondaires suisses", LH Working paper no. 07_04, University of Geneva.


1. ResearchB. Educational attainment and adult skills (1/2) Skill biased technological change (SBTC) is a major

challenge to any schooling system It may affect apprenticeship education through a

shift in the labour demand as well as through lower wages for apprentice workers

This leads to two research questions: What type of education cope better with SBTC? What kind of skills is valued on the labour market? Results should allow to better tailor the content of

vocational education


1. ResearchB. Educational attainment and adult skills (2/2) Two ways to answer these questions: Returns to (or effect of) skills: determine

means by which education enhances worker success (1)

Wage profile: returns to skills and education types in SBTC environment (2)

(1) is based on ALL data (2) is based on official wage statistics as well

as private sources (R+D survey)


1. ResearchB. Educational attainment and adult skills: papers and

publications Falter, J..-M. (2006), "Employer learning and literacy

scores in Switzerland", LH Working paper no. 06_01, University of Geneva.

C. Pasche, (2007), "A New Measure of the Cognitive and Non Cognitive Components of Education", LH Working paper no. 07_02, University of Geneva.

Falter, (2007), "Mismatch and Skill Utilization: Determinants and Consequences", LH Working paper no. 07_03, University of Geneva.

Falter, J.-M et C. Pasche, (2007), "Formation, compétences et marché du travail (titre non définitif)", Office fédéral de la statistique, Neuchâtel, forthcoming.


1. ResearchC. Firm behaviour and vocational education We focus on lifelong learning We currently work on gathering new data Our research questions are: Lifelong training and apprenticeship: do apprentice

degree holder entail larger investments in lifelong training?

Wages: how are shared potential productivity gains from lifelong training?


2. Skills and the labour marketA. Introduction

Before tackling the specificity of vocational education, we must acquire a broad understanding of the mechanism at work

Vocational education is supposed to have many virtues on the labour market: reduce asymmetric information, better job matching, etc.

Does widespread apprenticeship really make a difference?


2. Skills and the labour marketB. Employer learning (1/4)

Assessing the signalling content of education is a central question in economics

Does education improve ones productivity or does it solely signals some ability to potential employers?

Signalling questions the legitimacy of education investments

It could also lead to other problems like skill mismatch



A traditional test of this model consists in investigating employer learning: is education an accurate measure of skills or do employers gradually learn about their worker productivity?

The literature has produced distinct results between Germany and Anglo-Saxons countries: these discrepancies were interpreted in the light of apprenticeship education

We test more thoroughly this hypothesis: does apprenticeship education reduce asymmetric information?



Our results show that the employer learning hypothesis is valid in Switzerland

We show that the returns to initially unobserved characteristics (in our case literacy) increase with time while the returns to education decrease with time

Different results from Germany mainly come from the research instrument



Analysis by education types show little difference between vocational education and academic education while there is differences between types of workers (blue/white collars)

Actually, we find weak evidence of more acute information problems among apprenticeship


2. Skills and the labour marketC. The “cognitive” and “non-cognitive” component

of education It is well known that education enhances worker

success Yet, little is know about what triggers labour

market advantages We distinguish between basic skills (literacy

variables available in ALL) and other skills


2. Skills and the labour market

YS y

X

F

y: wages, YS: years of schooling, X: years of experience, F: family background

Mincer, 1974



X

TCS

YS y

F

Gintis 1971 et Bowles et al. 2001

Y: wages, YS: years of schooling, TCS:total cognitive skills, X: years of experience, F: family background



YS y

X

F

SCS

y: wages, YS: years of schooling, SCS: schooling cognitive skills, X: years of experience, F: family background

Pasche 2007



YS y

X

F

SCS

NSCS

Pasche 2007

y: wages, YS:years of schooling, SCS:schooling cognitive skills, NSCS: non-schooling cogntive skils, X: years of experience, F family background



2. Skills and the labour marketC. The “cognitive” and “non-cognitive” component of

education: summary (1/2) We show that vocational education has little impact

in improving basic skill levels Taking naïve estimates, basic skills make up only

10% of the wage premium attached to vocational education compared to high school drop-outs

Disentangling between “schooling cognitive skills” and “non-schooling cognitive skills”, we show that cognitive skills make up a large part of the wage premium (approximately 50%)


2. Skills and the labour marketC. The “cognitive” and “non-cognitive” component of

education: summary (2/2) Basic skills are much better rewarded when certified The ratio between of the returns to schooling

cognitive skills and the returns to non-schooling cognitive skills is equal to 4

Policy implications: basic skills are an important aspect of education, even for vocational education

Moreover, non-schooling cognitive skills are not rewarded at labour market entry


3. Research agenda Themes that should be investigated (or investigated

further) Skills: mismatch and apprenticeship should be

investigated with alternative data capturing change in the demand for apprenticeship workers (SLFS, LSE)

Transitions: disentangling economic factors from more sociological factors such as parents’ role model, pure intergenerational effects, etc. Analysis have started with Swiss household panel

Search for new data: impact of the schooling system on secondary school transitions


http://www.unige.ch/ses/lea/lh/

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