The Returns to Academic and Vocational Qualifications in Britain

26 Pages Posted: 29 Dec 2002

See all articles by Lorraine Dearden

Lorraine Dearden

Institute for Fiscal Studies (IFS)

Steven McIntosh

London School of Economics & Political Science (LSE)

Michal Myck

German Institute for Economic Research (DIW Berlin); IZA Institute of Labor Economics

Anna F. Vignoles

London School of Economics & Political Science (LSE)

Abstract

This paper uses data from the 1991 sweep of the National Child Development Study (NCDS) and the 1998 Labour Force Survey (LFS) to provide a comprehensive analysis of the labour market returns to academic and vocational qualifications. The results show that the wage premia from academic qualifications are typically higher than from vocational qualifications. However, this gap is reduced somewhat, when we control for the amount of time taken to acquire different qualifications. This is particularly important for vocational courses, which generally take shorter time periods to complete. In the paper we also investigate how returns vary by gender, subsequent qualifications, and the natural ability of individuals. Finally, by comparing the NCDS results with those from the LFS, we estimate the bias that can result from not controlling for factors such as ability, family background and measurement error. The results reveal that the estimated returns in the NCDS equations controlling for ability, family background and measurement error are similar to the simple OLS estimates obtained with the LFS, which do not control for these factors. This suggests that the biases generally offset one another.

Suggested Citation

Dearden, Lorraine and McIntosh, Steven and Myck, Michal and Vignoles, Anna F., The Returns to Academic and Vocational Qualifications in Britain. Available at SSRN: https://ssrn.com/abstract=317822

Lorraine Dearden (Contact Author)

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Steven McIntosh

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London WC2A 2AE
+44 (0)171 955 7442 (Phone)

Michal Myck

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Anna F. Vignoles

London School of Economics & Political Science (LSE) ( email )

Centre for Economic Performance (CEP)
Houghton Street
London WC2A 2AE
United Kingdom

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