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

Simone N. Tuor; Uschi Backes-Gellner

doi:10.1108/01437721011066335

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International Journal of Manpower

ISSN: 0143-7720

Online from: 1980

Subject Area: Economics

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

Document Information:
Title:	Risk-return trade-offs to different educational paths: vocational, academic and mixed
Author(s):	Simone N. Tuor, (University of Zurich, Zurich, Switzerland), Uschi Backes-Gellner, (University of Zurich, Zurich, Switzerland)
Citation:	Simone N. Tuor, Uschi Backes-Gellner, (2010) "Risk-return trade-offs to different educational paths: vocational, academic and mixed", International Journal of Manpower, Vol. 31 Iss: 5, pp.495 - 519
Keywords:	Education, Risk management
Article type:	Research paper
DOI:	10.1108/01437721011066335 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Acknowledgements:	This study is partly funded by the Swiss Federal Office for Professional Education and Technology through its Leading House on the Economics of Education: Firm Behaviour and Training Policies. The authors would like to thank the Swiss Office of Statistics for data provision, Sandra E. Black, Stefan C. Wolter, Dieter Pfaff, participants of the International Conference on Economics of Education: Firm Behaviour and Training Policies, the Research Seminar of the Department of Economics of the University of Zurich (HUI) and an anonymous referee for helpful comments. Most able research assistance was provided by Stefan Rüst.
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.