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The effects and perceived benefits of participation in adult education, re-education and further education on an individual level

by Jens Clausen, akf, Anne Larson, Danmarks Pædagogiske Universitet, Michael Rosholm, akf Aarhus Universitet and Lars Skipper, akf, March 2006

Summary

The aim of this analysis is to provide information on the effects and perceived benefits of participation in adult education, re-education and further education (VEU) for those participating in these activities in Denmark. As far as the impact study is concerned, effect is measured on the basis of the subsequent level of employment, earnings and increase in number of study years, i.e. future educational activities. These analyses are carried out on the basis of registry-based data on a 10 per cent representative random sample of the Danish population from Statistics Denmark. A total of 8,599 people were interviewed, equivalent to a response rate of 59.5 per cent. Data from the 2004 user survey have been weighted in the analysis to allow for the over and under representation of certain groups among the interviewees. In this part of the analysis, the main focus is on the perceived effects in relation to work and continued education or training.

The background for the study is the fact that the Tripartite Committee on Lifelong Skills Enhancement and Education and Training for All in the Labour Market – whose job it is to provide the basis for further dialogue between the Danish government and representatives of the labour market regarding the possibilities for furthering a goal of lifelong skills enhancement and education and training for everyone – has financed a number of studies, all dealing with various aspects of VEU. This report presents the findings of one of these studies, and is to be used as background material for the Tripartite Committee. The main reason for analysing this subject is to gain an understanding of the demands placed on the Danish labour force as the result of increased globalisation and technological development. In this regard, VEU is an obvious instrument for improving the qualifications level of the labour force. As such, one would expect participants in VEU to be better equipped to keep their jobs than non-participants, insofar as they should be in a better position to satisfy the demands resulting from changes in the labour market. One would also expect, based on the classical human capital theory that earnings are determined by the level of productivity (Becker 1964), that employees who have participated in VEU – insofar as participation in VEU raises productivity – are in a position to earn a higher hourly wage.1 Finally, one would expect that participation in VEU would make it easier to participate in VEU in the future, and this aspect is naturally an important consideration when quantifying the effects on earnings and employment. It is also the case that participation in VEU – which in Denmark is for the most part state-financed and can be both general or company-specific – generates some incentives for the company to hold on to the employee. It is possible that the wage profile is designed in such a way that any pay increases are not implemented immediately after the completion of VEU participation, but at a later time. This gives grounds for an analysis that observes the drop-out variable over a longer period, after the completion of VEU participation. In this report, we analyse the effects of VEU participation for up to seven years after the commencement of a VEU course of study.

It is important to point out that we only analyse partial effects, i.e. effects at an individual level. Consequently, we do not cover general equilibrium effects. The effects identified or measured at an individual level are therefore not directly transferable to society level.

It is, for instance, possible that participation in VEU actually increases the participant’s productivity, but that there are positive externalities for the company as well in connection with the employee’s participation in VEU (rub-off effect, knowledge-sharing, team-based bonus payment schemes, etc.). This could mean that the productivity of the entire staff increases (or that it increases for a team in which some have participated in VEU and others have not), and that the individual effects of participation among participants in VEU will be underestimated. This does not, however, mean that the effects of VEU cannot be observed, just that they have to be looked for within the company.

There may also be macro-economic effects which are missed by this analysis. VEU may, for example, lead to increased competition in the labour market, in the form of a greater and/or better qualified labour force. Such effects would be incredibly difficult to measure, both in this and in the other analyses. To the extent that VEU participation involves negative implications, such as the crowding-out of non-participants, any positive individual effects for participants will overestimate the overall socio-economic benefits of VEU.

Finally, it should be noted that we are estimating the average effect of treatment on the treated. Our findings concern only the population of Danes who participated in VEU in 1996 and 2000, respectively. The findings cannot be used for extrapolation where other sectors of the population are concerned without making further assumptions. Generally, it should be assumed that as long as participants select the courses on the basis of (among other things) expected benefits, a reduction in the VEU courses offered would result in a greater average benefit (but for a smaller population), while an expansion of VEU courses would probably result in a smaller average benefit (but for a larger population).2

Due to these problem areas, it is naturally important to group together this evaluation with effect measurements from the company as a whole and with the other reports which come under this review programme in order to obtain as full a picture as possible of the consequences of VEU.

The data on VEU participation comes from Statistics Denmark’s student registry, which is combined with IDA (Integrated Database for Labour Market Research) in order to obtain various types of background information on participants and non-participants in VEU. The effects of the above-mentioned drop-out variables, level of employment, earnings and additional study years, are calculated using the matching method. In short, this method involves finding an identical twin from among the group of people not participating in VEU, for each person participating in VEU. In practice, this twin does not, of course, actually exist, so a non-participant is used who is most similar to the participant. Participants and non-participants are matched on the basis of their background characteristics, and interpretation of the estimated parameters as a causal connection – which means that a connection discovered between a drop-out variable and course participation is not spurious – applies under certain statistical conditions which are discussed in this report.

A distinction is made in the review between the three types of VEU in Denmark: general education, vocational training including EUD (vocational qualification level) and further education. The registry-based part of the analysis has been extended to include private courses in 2000, which also applies to the analysis of the perceived effects that contains a review of the perceived benefits of internal company courses.3 

Key findings

The main conclusions of this report are that, as a consequence of participation, all three main types of VEU in Denmark lead to further participation among individuals later on. This is particularly the case with general and further education courses. Participation in vocational training courses is found to have a positive influence on the level of employment, but does not have an impact on hourly wages, while the opposite is the case for further education. Here, participation results in a higher hourly wage, but no greater connection to the labour market. Finally, participation in general courses coincides with a fall in both employment and income for the individual participant.

Participation in VEU is especially thought to have an impact in professional and directly work-related areas, and in regard to creating a desire for further training. And this corresponds precisely to the realised effects. Most people interviewed feel that they have gained some professional benefit from their participation in VEU. A total of 77 per cent say that they have acquired, to a greater or lesser extent, good professional qualifications from their participation in VEU. The majority of the VEU activities included in the analysis are professional, and participants in the courses also often feel that they receive professional benefit from their participation. The greater majority of those who have participated in VEU also feel that they have gained some skills/knowledge, which they can use in connection with their work.

Notes

  1. This only applies if the acquired improvement in productivity contains a general component and is not merely company-specific, see e.g. Acemoglu & Pischke (1999).
  2. This argument is further supported by Rosholm & Skipper (2003), where the effects of participation in vocational courses, specifically AMU (Adult vocational training) courses, are evaluated for the population in terms of margin of participation. In this regard, it is found to be far from certain that this population has any financial gain or benefit from their participation in terms of employment.
  3. General education activities are not included in this study, neither are individual courses followed at public education institutions (apart from the Danish higher preparatory examination and AVU – general adult education), conferences and overseas education and training programmes.
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