Investing in Technical and Vocational Education and Training : Does it Yield Large Economic Returns in Brazil?

Technical education and training has been dramatically expanding in Brazil recently. However, there remains no evidence on the cost effectiveness of this alternative track to a more general education. This paper quantifies the wage returns of completing technical and vocational education and training compared with the returns of completing the general education track, for individuals with similar observable characteristics. Exploring data from the Brazilian National Household Sample Survey, the paper profiles the students taking up this track and quantifies the impact of different types of technical and vocational education and training courses on individuals’ hourly wages. After controlling for selection on observables with propensity score matching, the analysis shows positive and statistically significant wage premiums for students completing technical school at the upper secondary level (on average 9.7 percent ) and for those completing short-term training courses (2.2 percent on average). The paper also documents significant heterogeneity of impacts depending on the courses and the profile of students. For realistic unitary costs of providing technical and vocational education and training, the evidence suggests technical education is a cost-effective modality. The courses offered by the publically financed and privately managed “Sistema S,” together with courses in the manufacturing area have the highest positive impacts.