IDEAS home Printed from https://ideas.repec.org/a/eme/ijmpps/v31y2010i5p495-519.html
   My bibliography  Save this article

Risk‐return trade‐offs to different educational paths: vocational, academic and mixed

Author

Listed:
  • Simone N. Tuor
  • Uschi Backes‐Gellner

Abstract

Purpose - The purpose of this paper is to investigate the rates of return and the risks of different types of educational paths – all leading to a tertiary educational degree. The paper seeks to distinguish a purely academic educational path from a purely vocational path and a mixed path with loops through both systems. Design/methodology/approach - The paper studies the labor market outcome to compare earnings and calculate net return rates as well as risk measures to investigate whether different educational paths are characterized by different risk‐return trade‐offs. Entrepreneurs are separated from employees in order to examine whether for the same combination of education the labour market outcomes differ between the two groups. Findings - The empirical results are based on the Swiss Labor Force Survey (SLFS) and demonstrate that mixed educational paths are well rewarded in the labor market. However, for entrepreneurs a high return is also associated with a high income variance. Research limitations/implications - The findings provide evidence for the existence of complementarities between vocational and academic education. Further research on mixed educational paths might provide more insight into this presumed relationship. Practical implications - Since the results indicate that mixed educational paths are a worthwhile strategy, the permeability of a national education system is a very important educational policy issue. Originality/value - The study is innovative in three ways: first, it focuses on complete educational paths and not just the highest educational degree. Second, an alternative measure, the Baldwin rate of return, is used to assess the profitability attached to different educational paths. Third, the income risk associated with each educational path is calculated.

Suggested Citation

  • Simone N. Tuor & Uschi Backes‐Gellner, 2010. "Risk‐return trade‐offs to different educational paths: vocational, academic and mixed," International Journal of Manpower, Emerald Group Publishing Limited, vol. 31(5), pages 495-519, August.
    • Handle: RePEc:eme:ijmpps:v:31:y:2010:i:5:p:495-519
    DOI: 10.1108/01437721011066335
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/01437721011066335/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/01437721011066335/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/01437721011066335?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hartog, Joop & Vijverberg, Wim P., 2002. "Do Wages Really Compensate for Risk Aversion and Skewness Affection?," IZA Discussion Papers 426, Institute of Labor Economics (IZA).
    2. Dearden, Lorraine, et al, 2002. "The Returns to Academic and Vocational Qualifications in Britain," Bulletin of Economic Research, Wiley Blackwell, vol. 54(3), pages 249-274, July.
    3. O. Ashenfelter & D. Card (ed.), 1999. "Handbook of Labor Economics," Handbook of Labor Economics, Elsevier, edition 1, volume 3, number 3.
    4. Schweri, Juerg & Hartog, Joop & Wolter, Stefan C., 2011. "Do students expect compensation for wage risk?," Economics of Education Review, Elsevier, vol. 30(2), pages 215-227, April.
    5. Kihlstrom, Richard E & Laffont, Jean-Jacques, 1979. "A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 719-748, August.
    6. Brunello, Giorgio & Comi, Simona, 2004. "Education and earnings growth: evidence from 11 European countries," Economics of Education Review, Elsevier, vol. 23(1), pages 75-83, February.
    7. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
    8. Matthias Benz & Bruno S. Frey, 2008. "Being Independent is a Great Thing: Subjective Evaluations of Self‐Employment and Hierarchy," Economica, London School of Economics and Political Science, vol. 75(298), pages 362-383, May.
    9. Ekelund, Jesper & Johansson, Edvard & Jarvelin, Marjo-Riitta & Lichtermann, Dirk, 2005. "Self-employment and risk aversion--evidence from psychological test data," Labour Economics, Elsevier, vol. 12(5), pages 649-659, October.
    10. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863, Elsevier.
    11. Marco Caliendo & Frank Fossen & Alexander Kritikos, 2009. "Risk attitudes of nascent entrepreneurs–new evidence from an experimentally validated survey," Small Business Economics, Springer, vol. 32(2), pages 153-167, February.
    12. George Psacharopoulos & Richard Layard, 1979. "Human Capital and Earnings: British Evidence and a Critique," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(3), pages 485-503.
    13. Christiansen, Charlotte & Joensen, Juanna Schroter & Nielsen, Helena Skyt, 2007. "The risk-return trade-off in human capital investment," Labour Economics, Elsevier, vol. 14(6), pages 971-986, December.
    14. Psacharopoulos, George (ed.), 1987. "Economics of Education," Elsevier Monographs, Elsevier, edition 1, number 9780080333793.
    15. Wolter Stefan C. & Weber Bernhard A., 1999. "On the Measurement of Private Rates of Return to Education / Ein Ansatz zur Messung privater Bildungsrenditen," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 218(5-6), pages 605-618, October.
    16. Lorraine Dearden, 1999. "Qualifications and earnings in Britain: how reliable are conventional OLS estimates of the returns to education?," IFS Working Papers W99/07, Institute for Fiscal Studies.
    17. Cramer, J. S. & Hartog, J. & Jonker, N. & Van Praag, C. M., 2002. "Low risk aversion encourages the choice for entrepreneurship: an empirical test of a truism," Journal of Economic Behavior & Organization, Elsevier, vol. 48(1), pages 29-36, May.
    18. Pedro Telhado Pereira & Pedro Silva Martins, 2004. "Returns to education and wage equations," Applied Economics, Taylor & Francis Journals, vol. 36(6), pages 525-531.
    19. Kierulff, Herbert, 2008. "MIRR: A better measure," Business Horizons, Elsevier, vol. 51(4), pages 321-329.
    20. Ignacio Palacios-Huerta, 2003. "An Empirical Analysis of the Risk Properties of Human Capital Returns," American Economic Review, American Economic Association, vol. 93(3), pages 948-964, June.
    21. Ziderman, Adrian, 1973. "Does it Pay to Take a Degree?," Oxford Economic Papers, Oxford University Press, vol. 25(2), pages 262-274, July.
    22. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    23. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
    24. Hartog, Joop & Vijverberg, Wim P.M., 2007. "On compensation for risk aversion and skewness affection in wages," Labour Economics, Elsevier, vol. 14(6), pages 938-956, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jean-Marc Falter & Giovanni Ferro Luzzi & Federica Sbergami, 2011. "The Effect of Parental Background on Track Choices and Wages," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 147(II), pages 157-180, June.
    2. Glocker, Daniela & Storck, Johanna, 2014. "Risks and returns to educational fields – A financial asset approach to vocational and academic education," Economics of Education Review, Elsevier, vol. 42(C), pages 109-129.
    3. Uschi Backes-Gellner & Patrick Lehnert, 2022. "Apprenticeships," Economics of Education Working Paper Series 0194, University of Zurich, Department of Business Administration (IBW).
    4. Daniel J. Henderson & Anne-Charlotte Souto & Le Wang, 2020. "Higher-Order Risk–Returns to Education," JRFM, MDPI, vol. 13(11), pages 1-25, October.
    5. Balestra, Simone & Backes-Gellner, Uschi, 2017. "Heterogeneous returns to education over the wage distribution: Who profits the most?," Labour Economics, Elsevier, vol. 44(C), pages 89-105.
    6. Miriam Rinawi & Uschi Backes-Gellner, 2021. "Labour market transitions after layoffs: the role of occupational skills," Oxford Economic Papers, Oxford University Press, vol. 73(1), pages 76-97.
    7. Miriam Rinawi & Uschi Backes-Gellner, 2020. "Firms’ method of pay and the retention of apprentices," Oxford Economic Papers, Oxford University Press, vol. 72(1), pages 269-291.
    8. Schäfer Andrea & Gottschall Karin, 2016. "Zahlt sich Akademisierung aus?: Geschlechtsspezifische Lohnniveaus und Erträge von höherer Bildung in Pflege- und ärztlichen Berufen," Arbeit, De Gruyter, vol. 25(3-4), pages 125-145, December.
    9. Aurelien Abrassart & Stefan C. Wolter, 2019. "Investigating the image deficit of VET: occupational prestige ranking depending on the educational requirements and the skill content of occupations," Economics of Education Working Paper Series 0168, University of Zurich, Department of Business Administration (IBW).
    10. Maria Esther Oswald-Egg & Ursula Renold, 2019. "No Experience, No Employment: The Effect of Vocational Education and Training Work Experience on Labour Market Outcomes after Higher Education," KOF Working papers 19-469, KOF Swiss Economic Institute, ETH Zurich.
    11. Fabian Sander & Irene Kriesi, 2019. "Medium and Long-Term Returns to Professional Education in Switzerland: Explaining Differences between Occupational Fields," Social Inclusion, Cogitatio Press, vol. 7(3), pages 136-153.
    12. Irene Kriesi & Fabian Sander, 2024. "Academic or vocational education? A comparison of the long-term wage development of academic and vocational tertiary degree holders," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 58(1), pages 1-28, December.
    13. Uschi Backes-Gellner, 2021. "Insights into the Economic Benefits of VPET for Individuals: Theoretical and Empirical Results for Researchers and Practitioners," Economics of Education Working Paper Series 0180, University of Zurich, Department of Business Administration (IBW).
    14. Oswald-Egg, Maria Esther & Renold, Ursula, 2021. "No experience, no employment: The effect of vocational education and training work experience on labour market outcomes after higher education," Economics of Education Review, Elsevier, vol. 80(C).
    15. Uschi Backes-Gellner, 2014. "Benefits of Apprenticeship Training and Recent Challenges - Empirical Results and Lessons from Switzerland and Germany," Economics of Education Working Paper Series 0097, University of Zurich, Department of Business Administration (IBW).
    16. EFI - Commission of Experts for Research and Innovation (ed.), 2012. "Research, innovation and technological performance in Germany - EFI Report 2012," Reports on Research, Innovation and Technological Performance in Germany, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin, volume 127, number 2012e, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Angel de la Fuente & Juan Francisco Jimeno, 2004. "The private and fiscal returns to schooling and the effect of public policies on private incentives to invest in education: a general framework and some results for the EU," Working Papers 152, Barcelona School of Economics.
    2. M. C. Navarro-Perez & J. M. Serrano-Sanz, 2002. "Evaluating Educational Output: An Estimation Method Based on Cross-Section Data," Education Economics, Taylor & Francis Journals, vol. 10(1), pages 71-95.
    3. Fossen, Frank M. & Büttner, Tobias J.M., 2013. "The returns to education for opportunity entrepreneurs, necessity entrepreneurs, and paid employees," Economics of Education Review, Elsevier, vol. 37(C), pages 66-84.
    4. Angel de la Fuente & Antonio Ciccone, 2003. "Human capital in a global and knowledge-based economy," UFAE and IAE Working Papers 562.03, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    5. Chaitali Sinha, 2014. "Human Capital and Public Policy," South Asian Journal of Macroeconomics and Public Finance, , vol. 3(1), pages 79-125, June.
    6. Daniel J. Henderson & Anne-Charlotte Souto & Le Wang, 2020. "Higher-Order Risk–Returns to Education," JRFM, MDPI, vol. 13(11), pages 1-25, October.
    7. Christiansen, Charlotte & Joensen, Juanna Schroter & Nielsen, Helena Skyt, 2007. "The risk-return trade-off in human capital investment," Labour Economics, Elsevier, vol. 14(6), pages 971-986, December.
    8. Mirjam van Praag & Arjen van Witteloostuijn & Justin van der Sluis, 2009. "Returns for Entrepreneurs versus Employees: The Effect of Education and Personal Control on the Relative Performance of Entrepreneurs vis-a-vis Wage Employees," Tinbergen Institute Discussion Papers 09-111/3, Tinbergen Institute.
    9. Saule Kemelbayeva, 2020. "Returns to schooling in Kazakhstan: an update using a pseudo-panel approach," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 10(3), pages 437-487, September.
    10. Colm Harmon & Hessel Oosterbeek, 2000. "The Returns to Education: A Review of Evidence, Issues and Deficiencies in the Literature," CEE Discussion Papers 0005, Centre for the Economics of Education, LSE.
    11. Corrado Andini, 2010. "A dynamic Mincer equation with an application to Portuguese data," Applied Economics, Taylor & Francis Journals, vol. 42(16), pages 2091-2098.
    12. Colm Harmon & Hessel Oosterbeek & Ian Walker, 2003. "The Returns to Education: Microeconomics," Journal of Economic Surveys, Wiley Blackwell, vol. 17(2), pages 115-156, April.
    13. Thomas Brodaty & Robert Gary-Bobo & Ana Prieto, 2006. "Risk Aversion and Human Capital Investment: a Structural Econometric Model," THEMA Working Papers 2006-06, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    14. Emanuela di Gropello, 2006. "Meeting the Challenges of Secondary Education in Latin America and East Asia : Improving Efficiency and Resource Mobilization," World Bank Publications - Books, The World Bank Group, number 7173.
    15. Harmon, Colm & Hogan, Vincent & Walker, Ian, 2003. "Dispersion in the economic return to schooling," Labour Economics, Elsevier, vol. 10(2), pages 205-214, April.
    16. Hector Espinoza & Stefan Speckesser, 2019. "A Comparison of Earnings Related to Higher Level Vocational/Technical and Academic Education," National Institute of Economic and Social Research (NIESR) Discussion Papers 502, National Institute of Economic and Social Research.
    17. Philip Trostel & Ian Walker, 2006. "Education and Work," Education Economics, Taylor & Francis Journals, vol. 14(4), pages 377-399.
    18. Thomas Lemieux, 2014. "Occupations, fields of study and returns to education," Canadian Journal of Economics, Canadian Economics Association, vol. 47(4), pages 1047-1077, November.
    19. Gregorio Caetano & Miguel Palacios & Harry A. Patrinos, 2019. "Measuring Aversion to Debt: An Experiment Among Student Loan Candidates," Journal of Family and Economic Issues, Springer, vol. 40(1), pages 117-131, March.
    20. Bonin, Holger & Dohmen, Thomas & Falk, Armin & Huffman, David & Sunde, Uwe, 2007. "Cross-sectional earnings risk and occupational sorting: The role of risk attitudes," Labour Economics, Elsevier, vol. 14(6), pages 926-937, December.

    More about this item

    Keywords

    Risk management; Education;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:ijmpps:v:31:y:2010:i:5:p:495-519. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.