Macroeconomic benefits of vocational education and training

Research Paper No. 40

Improvements in workforce skills are essential for European countries to attain higher economic growth and to compete effectively on product markets. Literature indicates a positive relationship between levels of education and productivity growth; this report builds on and expands this body of research in two ways. First, it investigates the differential impact of various skill types – higher (academic), upper-intermediate vocational, lower-intermediate vocational, lower-intermediate general, and low – on labour productivity. Then it accounts for the stock of uncertified skills (i.e. those built through training). The analysis is carried out in six EU Member States – Denmark, Germany, France, the Netherlands, Sweden and the UK – representing different modes of VET (and for which data were available). The analysis suggests that general and vocational skills complement each other and that the effect of (certified) skills on productivity is stronger when certified skills are reinforced by training.