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 paper 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 one year after graduation from higher education and 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, social network, and screening channels, not the signalling channel. Our results suggest that upper-secondary VET is a good choice, not the second-best, for individuals planning on higher education.