The Case for Vocational Training – A German Perspective

Annabel Mempel // 6 April 2018

American economist Bryan Caplan recently published “The Case Against Education” in which he explains how the United States needs to reform its current education system to be more profitable for students as well as society. His research mostly focuses on the American school system, so it is difficult to draw the same policy conclusions for European countries. However, many of his theoretical arguments have universal applicability. This post aims to examine the state of education in Germany, with a special focus on vocational training: an important part of higher education which is only briefly addressed by Caplan’s research.

Firstly, it is important to note that Caplan, looking at the American system, focuses on graduating high school at 18 after 12 years of education. He estimates that even for poor students who loathe school and do not have the necessary skills to continue their education on a university level, it is extremely valuable to finish and get a high school degree (Caplan concludes this after comparing different outcomes of a Selfish Return on Degree: the average rate of earnings with a certain degree depending on what type of student one is). Caplan’s calculations and suggestions for students might have been different had he been able to take into account different options for high school degrees, for example finishing with a degree after grade 9. Even though school certificates are a strong form of signaling and do not necessarily prove the existence of specific skills, he showed that the “sheepskin effect”, earning more the second you graduate and obtain a degree as opposed to for example dropping out the day before, proved to be most rewarding in high school and more valuable than dropping out without a degree. If earlier degrees would be possible in the US, similar to Germany for example, it would encourage poor students to graduate as early as they can and still get the effect of holding a completed degree. This is one of the reasons why the drop-out rate at high schools in Germany is negligible: only 4.0 % of the total population has no degree at all. Yet, the stigma of high school dropouts is very similar to that of graduates with low-level degrees such as the Hauptschulabschluss school leaving certificate after grade 9. Schools offering these low-level degrees are often seen as educating poor students with no obvious opportunities after graduation. However, this stigma is often unjustified.

“Most countries can’t be Germany.” Caplan praises the system that is currently implemented in the country. While it is true that vocational training is much more common, there is still plenty of room for improvement, and problems about US education are often applicable in Germany as well.

Caplan correctly emphasizes education as a certification for skill. It is easier for employers to seek suitable employees using the heuristic of a degree than it is to filter out great employees one by one, which would result in tremendous costs. Additionally, ability biases suggest that education causes most of the skills students have after they graduate. But is this true? Think of Bill Gates: he already had most of the skills he needed before graduating, allowing him to drop out and not waste his time. But, if everyone stopped getting degrees, how could employers limit potential applicants? How would they know if you are the next Bill Gates or just a poor student without socially-signalled qualities?

The United States needs to work on a more diverse higher education system to give its students more options; meanwhile, in Germany it seems that there are enough jobs available for those students who gain degrees other than the standard university degrees that predominate in the US system. German employers with vacant job positions prefer employing people with specific skills coming from training instead of fancy university degrees. Furthermore, the economic sectors with the most job offerings are in heavy industry and services. If one compares job vacancies across different levels of expertise required, what transpires is that it is mostly skilled labour that is needed, not “expertise”. For example, as of January 2018, there are a total of 23,470 open jobs in elderly care. 63% of these require the skilled labour which is acquired through training, and only 0.4% require specialists. Now, elderly care may be a field which requires little expertise, but even looking at financial services, for example insurance, 83% of offers are directed at skilled labour and only 11% at experts. More generally, in 2016, 64% of vacancies required a training equivalent degree, 20% no degree at all and only 16% a university equivalent degree. Why do these vacancies remain unfilled while more students enroll in university? In 2016, 2.8 million students were enrolled in university and only 1.3 million people enrolled in training.

This certainly seems to be a case of social desirability bias. As vocational training is not necessarily seen as the best option in Germany, “getting a bachelor’s degree” sounds a lot better to many students than “going into training.” Abitur graduates especially are often pushed towards university: they find they have the highest type of degree and feel it would be a shame to “waste it on training.” As Caplan shows, it all depends on what kind of student you are. Going on to a master’s degree is really only worthwhile for excellent students that love school, and can attain their degree in a lucrative prospective field, engineering for example; university is quite profitable for good students, but this also depends on personal characteristics.

This all comes back to the selfish return on degree. But Caplan also sees this from a social perspective. It is especially unprofitable for society to send a low-achieving student to college: the money spent on education by taxpayers will not result in increased productivity at the workplace after receiving the degree, calculated by social return on degree. Yet Caplan finds that vocational training remains due to the stigma attached to it, even though productivity increases compared to traditional education.

Germany however is not as limited in higher education options as the United States. There are still many different options for students. Dual degrees offer a Bachelor’s degree together with practical experience. In 2016, 79% of graduates in Baden-Württemberg with a dual degree had open-ended full-time contracts.

In the case of vocational training, Germany is already pushing for more recognition and improvement through different initiatives. Erasmus+ for example offers cultural exchange for trainees in Europe.

Many students might want to choose university over training for more general reasons of personal satisfaction. Yet Caplan suggests that education has no proven effect on happiness; work can build character just as effectively and especially for students without the capacity for traditional learning. Learning on the job and receiving positive feedback on their skill development can be more rewarding than being forced into boring classrooms.

Caplan definitely has a point when it comes to what students actually learn in class compared to what they need for their job later on. He also makes convincing arguments about happiness, crime and income outcomes. However, the purpose of school is not really drawn out. Do we go to university to prepare for a job? Or do we go to university for the sake of knowledge? His view on many degrees is also extremely single-sided. If one studies foreign languages there are far more job opportunities than becoming a translator. Thus I am not quite convinced by his argument that most education is entirely a waste. But his point that society needs “less education” definitely stands, so far as it is less the amount of education that is important than what students actually get out of it. And in the case of students that are not able to learn as much as expected, it is extremely important to focus on improving the vocational training sector to ensure that everyone has opportunities that fit their abilities, as well as accurately preparing people for the current labour market.

These views are the author’s only and do not necessarily reflect the stance of the EPICENTER Network.

EPICENTER publications and contributions from our member think tanks are designed to promote the discussion of economic issues and the role of markets in solving economic and social problems. As with all EPICENTER publications, the views expressed here are those of the author and not EPICENTER or its member think tanks (which have no corporate view).