The Effect of VET Completion on the Wages of Young People

As part of the drive to lift Australia's productivity, there has been a push for an increase in the number of course completions in both the vocational education and training (VET) and higher education sectors. While it is generally assumed that completing a course is the desired outcome, it is also expected that individuals will acquire skills even if they do not complete the course. Using the 1995 and 1998 cohorts of the Longitudinal Surveys of Australian Youth (LSAY), this study looked at both the effects of participation in and completion of post-secondary educational qualifications on wages. Key findings from this study include: (1) Participation in tertiary education brings wage advantages for young people, even if the course is not completed. This presumably reflects the skills acquired, although it could also reflect the personal characteristics that have led to participation in the first place; (2) As expected, completion of a qualification in general brings a further wage advantage; and (3) On average, the largest wage benefits come from participating and then completing a bachelor's degree. One of the difficulties of this type of study is that the relatively small sample sizes impact on the statistical significance of some of the results. They also limit the degree to which the variation in outcomes can be captured. This particularly affects the analysis of vocational qualifications because of the very large variation in wage outcomes; for example, courses such as electrotechnology lead to relatively high wages, which are not shared by courses such as those in the food trades. We need to keep in mind that some individuals will fare much better than the average, while others do less well. Appended are: (1) An overview of the literature; (2) Additional information about vocational education and training (VET) courses in Australia; (3) Summary statistics for the samples based on those in work two years and three years after the last education spell; (4) Average hourly wage rates by last education spell, completion status and school level; and (5) Estimation results. (Contains 23 tables, 9 figures and 32 footnotes.)