The returns to vocational education in Italy

Several studies promote vocational education as an effective solution to the school-to-work transition issues, which have become endemic for the most advanced economies. However, individuals choosing this track may face a trade-off among a labour-market advantage at early stage of their individual careers and quicker skills’ depreciation in the long-run, due to less adaptability and technological change, becoming less competitive than skills provided by academic-based education, in a lifelong learning perspective. Using microdata from the Survey of Household Income and Consumption (SHIW), we follow individuals over their life-cycle for at least 40 years, to investigate whether this view has empirical support in a borderline country-level labour market, stressing outcomes’ differences among school-based vocational education and a more traditional academic-based education at upper-secondary school level. We find strong and robust support to this trade-off, evidencing how a critical labour-market shock as the 2007–08 Financial Crisis has diluted the early advantage of vocational skills. We further address for selectivity in education investigating whether outcomes may vary between cohorts from different decades. Whilst differences in youth employment appears in contrast among birth cohorts, there are no significant results for wages, but it seems clear that vocational skills have weakened moving through years.