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CVER Research Paper
The value of progression in further education
Alice Battiston, Gavan Conlon, Sophie Hedges and Pietro Patrignani
August 2019
Paper No' CVERDP022:
Full Paper (pdf)

JEL Classification: I26; J21; J31; J64

Tags: vocational education; administrative data; returns to education

In this study, we investigate the value of progression associated with different vocational qualifications disaggregated by subject area of study. Previous analyses of labour market outcomes by subject of study demonstrated that estimates of labour market outcomes vary considerably by subject area, but this is in part as a result of the choice of counterfactual. In particular, the choice of the adjacent level of qualification (not controlling for subject of study) captures an ‘average’ return using learners with qualifications at the level below in any subject area in the counterfactual group. This approach does not take into account that learners tend to self-select in specific subject areas depending on their (observed and unobserved) characteristics and that transitions between completely different subject areas are unlikely to happen due to admissions criteria. The analysis of the value of progression confirms that in the majority of subject areas, the degree of specialisation increases as we move up in the qualifications framework, and that as such, comparing outcomes of individuals on particular subject pathways against anyone in possession of the adjacent level of qualification may not may not fully reflect the options concretely available to students and the associated expected gain from progressing to further study. If we consider earnings trajectories within the same subject areas, earnings differentials associated with ‘Construction’, ‘Engineering’ and ‘Business and Law’ are strong and positive (but lower in magnitude compared to analyses using the counterfactual of all learners with qualifications at the level below), while subject areas with typically zero earnings differential in previous analysis (such as ‘Arts & Media’) are associated with positive earnings differentials when considering progression within the same subject area.