Elena Villar (Università cattolica del Sacro cuore)

LABOR Seminar – Trimming Inefficiencies while Rewarding Excellence: Labour Market Returns to Tertiary Vocational Education and the Role of Course Quality

Abstract: We estimate labour market returns to tertiary vocational education in Italy, pointing to the role of course quality. We use a unique dataset on the universe of students enrolled in the tertiary vocational education track (ITS) in a Northern Italian region from 2011 to 2019. Our empirical strategy relies on the comparison of ITS completers with both non-completers and individuals holding high-school diplomas, and the estimation of fixed-effects models with individual time trends. Our results suggest that earning an ITS degree has substantial effects: a 12% increase in earnings at hiring and a 30% higher probability of employment. The main novelty of our work lies in the exploration of a unique feature of the Italian tertiary vocational education system: the official evaluation of the quality of each ITS course, which determines additional public fundings. Our findings suggest that low-quality courses, particularly those experiencing closure, do not yield significant returns to their graduates. This result points to public evaluation of curse quality as an effective tool to phase out inefficient and ineffective courses, thereby enhancing the overall efficiency of the tertiary vocational education system.

Joint with Simona Comi and Federica Origo