One size does not fit all: the role of vocational ability on college attendance and labor market outcomes

Available from: 
October 2013
Paper author(s): 
Maria Prada (University of Maryland)
Sergio Urzúa (University of Maryland)
Education - Health

In this paper we study the role of a dimension of ability, vocational ability, that has received little attention by economists when analyzing schooling choices and labor market outcomes. We rst describe this ability and then analyze its eect on schooling decisions and wages. To analyze its contribution, we estimate a Roy model with factor structure that deals with the endogeneity of schooling and also allows to dierentiate tests scores from unobserved abilities. The results indicate that vocational ability has a positive reward on the labor market as all other dimensions of ability. But, in contrast with standard measures of ability, vocational ability reduces the probability of going to college. In particular, the results from the simulation indicate that one standard deviation increase in cognitive ability is associated with an increase of 18.5 percentage points in the probability of attending 4-year college and 0.8 percentage points for noncognitive ability, while the same increase in vocational ability reduces the probability in 8 percentage points. The returns to cognitive and noncognitive ability are considerably higher than the returns to vocational (9 and 4 percent respectively compared to 1.2 percent for vocational ability). However we nd that for the highest decile of vocational ability the conditional mean of hourly wages is higher than the alternative, suggesting that for individuals with very high levels of vocational ability but low levels of standard ability (cognitive and noncognitive) not going to college is associated with the highest expected hourly wage.


Research section: 
Lacea 2013 annual meeting
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