General versus vocational education: lessons from a quasi-experiment in Croatia

Commissioned by: CERGE-EI - GDN RRC 2016 Regional Research Competition
Project duration: January 1, 2016 – December 23, 2016
Project manager: Ivan Žilić

Brief outline:   
This paper evaluates the effects of general education on labor market outcomes in post-transition Croatia. Using high school educational reform implemented in Croatia in 1975/76 and 1977/78 as a quasi-natural experiment, we are able to circumvent the issue of self-selection into the type of high school. In particular, high school education was split in two phases which resulted in reduced tracking and extended general curriculum for pupils attending vocational training. Exploiting rules on elementary school entry and the timing of the reform, we use regression discontinuity design and pooled Labor Force Surveys 2000-2012 to identify the causal effect of additional years of general education on educational decisions as well as on labor market outcomes measured as wages, total years of work, employment and activity status. We find that the reform, on average, reduced the probability of finishing high school, but did not change individuals' labor market perspectives. We conclude that the observed general-vocational wage differential is mainly driven by self-selection into the type of high school.