Early Tracking, Academic vs. Vocational Training and the Value of 'Second Chance' Options

61 Pages Posted: 23 Oct 2017

See all articles by Martin Biewen

Martin Biewen

University of Tuebingen; Institute for the Study of Labor (IZA)

Madalina Tapalaga

University of Tuebingen

Abstract

This paper employs the dynamic treatment effects methodology proposed by Heckman et al. (2016, 2017) to examine educational transitions and expected returns in the German education system which is characterized by rigid early tracking but with options to revise track choices at later stages. We document strong sorting of individuals along observed and unobserved characteristics across the stages of the system. We consider expected wage returns to track choices including the continuation values arising from the options opened up by choosing a certain track. Expected returns to choosing higher tracks are generally positive but highly heterogenous.We find sorting on gains at many but not all stages of the system. A considerable percentage of the population exercises 'second chance' options to revise earlier track choices. The value of these options strongly depends on parental background as individuals from higher backgrounds are better able to exploit the possibilities opened up by these options at later stages. We present estimates of wage returns to different forms of vocational and academic training free of ability and sorting bias. Returns to academic training are particularly heterogenous.

Keywords: heterogeneous returns, vocational training, educational expansion, sorting on gains

JEL Classification: C3, I21, I26, J31

Suggested Citation

Biewen, Martin and Tapalaga, Madalina, Early Tracking, Academic vs. Vocational Training and the Value of 'Second Chance' Options. IZA Discussion Paper No. 11080, Available at SSRN: https://ssrn.com/abstract=3056618 or http://dx.doi.org/10.2139/ssrn.3056618

Martin Biewen (Contact Author)

University of Tuebingen ( email )

Eberhard Karls Universität
Geschwister-Scholl-Platz
Tübingen, 72074
Germany

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Madalina Tapalaga

University of Tuebingen ( email )

Geschwister Scholl Platz
Tübingen, 72070
Germany

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