DOES VOCATIONAL EDUCATION PAY OFF? WAGE AND UNEMPLOYMENT EFFECTS OF VOCATIONAL HIGH SCHOOL IN INDONESIA
DOI:
https://doi.org/10.33736/ijbs.14464.2026Keywords:
Vocational High School Graduates, Wage Attainment, Unemployment, Labour Market, IndonesiaAbstract
This study examines the labor market performance of Vocational High School (VHS) graduates in Indonesia, with a focus on wage attainment and the probability of unemployment. Utilizing data from the Indonesian National Labor Force Survey (SAKERNAS) for the years 2021 and 2022, with approximately 1.25 million individual observations, this study employs a robust treatment effects framework using Inverse Probability Weighted Regression Adjustment (IPWRA). To capture distributional heterogeneity in wage outcomes, IPWRA estimates are complemented by quantile regressions at the 25th, 50th, and 75th percentiles, attempting to analyze vocational wage returns across wage distribution. The findings indicate that vocational high school (VHS) education yields an average wage premium of 27.8% across the wage distribution, with the strongest effect observed among individuals in the lower quantiles of earnings. Furthermore, logit estimation results demonstrate that VHS graduates exhibit an 18.5% lower probability of unemployment compared to general high school (GHS) graduates, suggesting more favorable labor market outcomes associated with vocational education. These findings indicate that vocational high school education in Indonesia increases income and improves employment opportunities, particularly for workers in the lowest wage percentile. Policy implications highlight the importance of strengthening curriculum-industry alignment and transition mechanisms from high school to the workforce.
References
Allen ER (2016) Analysis of trends and challenges in the Indonesian labor market. Asian Development Bank. https://www.adb.org/sites/default/files/publication/182935/ino-paper-16-2016.pdf
Alp E, Karadeniz O, Çağlar A, İslamoğlu E (2022) Does extending the internship period in vocational schools of higher education lead to better employment results? The case of Turkey. Educ + Train ahead-of-print(ahead-of-print). https://doi.org/10.1108/ET-11-2021-0418
https://doi.org/10.1108/ET-11-2021-0418
Ariansyah, K., Wismayanti, Y. F., Savitri, R., Listanto, V., Aswin, A., Ahad, M. P. Y., & Cahyarini, B. R. (2024). Comparing labor market performance of vocational and general school graduates in Indonesia: insights from stable and crisis conditions. Empirical Research in Vocational Education and Training, 16(1). https://doi.org/10.1186/s40461-024-00160-6
https://doi.org/10.1186/s40461-024-00160-6
Astuti NFV, Setyonaluri D (2022) Labor Market Outcomes of Vocational High Schools (SMK) and General High Schools (SMA) during the COVID-19 pandemic. J Indonesia Sustainable Dev Plann 3(3):278-293. https://doi.org/1
https://doi.org/10.46456/jisdep.v3i3.328
Bahl S, Bhatt V, Sharma A (2021) Returns to formal and informal vocational education and training in India. Int J Manpow 43(7):1620-1645. https://doi.org/10.1108/IJM-04-2021-0211
https://doi.org/10.1108/IJM-04-2021-0211
Bairagya, I. (2021), "Impact of formal vocational training on the earnings of self-employed individuals in rural India", Journal of Business Venturing Insights, Vol. 16, doi: 10.1016/j.jbvi. 2021.e00269 Becker, G. S. (1964). Human capital: A theoretical and empirical analysis, with special reference to education. University of Chicago Press.
https://doi.org/10.1016/j.jbvi.2021.e00269
BPS. (2024). Tingkat Pengangguran Terbuka Berdasarkan Kelompok Umur, 2021-2023. Badan Pusat Statistik.
BPS. (2024). Upah Rata-rata Per Jam Pekerja Menurut Tingkat Pendidikan (Rupiah/Jam), 2023. Badan Pusat Statistik.
Carlo, R., & Dwyer, R. J. (2018). The impact of vocational training on transition-aged adults. The Journal of Mental Health Training, Education and Practice, 13(6), 307-317. https://doi.org/10.1108/JMHTEP-01-2018-0002
https://doi.org/10.1108/JMHTEP-01-2018-0002
Chamadia, S., & Mubarik, M. S. (2021). Assessing the effectiveness of vocational training programs in Pakistan: an experimental study. Education + Training, 63(5), 665-678. https://doi.org/10.1108/ET-04-2020-0085
https://doi.org/10.1108/ET-04-2020-0085
Chen, D. (2009). Vocational Schooling, Labor Market Outcomes, and College Entry. Policy Research Working Paper Series, The World Bank, January, 1-27. http://ssrn.com/paper=1327283
https://doi.org/10.1596/1813-9450-4814
Choi SJ, Jeong JC, Kim SN (2019). Impact of vocational education and training on adult skills and employment: an applied multilevel analysis. Int J Educational Dev 66:129 138. https://doi.org/10.1016/j.ijedudev.2018.09.007
https://doi.org/10.1016/j.ijedudev.2018.09.007
Comi SL, Grasseni M, Origo F (2022) Sometimes it works: the effect of a reform of the short vocational track on school-to-work transition. Int J Manpow 43(7):1601-1619. https://doi.org/10.1108/IJM-06-2021-0391
https://doi.org/10.1108/IJM-06-2021-0391
Doerr A (2022) Vocational training for female job returners-effects on employment, earnings and job quality. Labour Econ 75:102139. https://doi.org/10.1016/j.labeco.2022.102139
https://doi.org/10.1016/j.labeco.2022.102139
Ferri V, García-Pereiro T, Pace R (2022) Gender pay-gap: exploring the school-to-work transition of graduates in Italy. Int J Manpow 44(6):1143-1167. https://doi.org/10.1108/IJM-06-2021-0363
https://doi.org/10.1108/IJM-06-2021-0363
Groot, W., & Van Den Brink, H. M. (2000). Education, training and employability. Applied Economics, 32(5), 573-581. https://doi.org/10.1080/000368400322471
https://doi.org/10.1080/000368400322471
Hanushek EA, Schwerdt G, Woessmann L, Zhang L (2017) General Education, Vocational Education, and Labor-Market out comes over the lifecycle. J Hum Resour 52(1):48-87
https://doi.org/10.3368/jhr.52.1.0415-7074R
Hartog, J., Raposo, P. S., & Reis, H. (2018). Vocational High School Graduate Wage Gap: The Role of Cognitive Skills and Firms. SSRN Electronic Journal, 7075. https://doi.org/10.2139/ssrn.3212543
https://doi.org/10.2139/ssrn.3212543
Heinesen, E., & Lange, E. S. (2022). Vocational versus General Upper Secondary Education and Earnings. Journal of Human Resources, 0221-11497R2. https://doi.org/10.3368/jhr.0221-11497r2
Koenker, R. (2005). Quantile regression [M]. Econometric Society Monographs, Cambridge University Press, Cambridge.
https://doi.org/10.1017/CBO9780511754098
Mincer, J. (1974). Schooling, experience, and earnings. Columbia University Press.
Neugebauer M, Weiss F (2018) A transition without tradition: earnings and unemployment risks of academic versus vocational education after the Bologna process. Z Für Soziologie 47(5):349-363. https://doi.org/10.1515/zfsoz-2018-0122
https://doi.org/10.1515/zfsoz-2018-0122
Newhouse D, Suryadarma D (2011a) The Value of Vocational Education: High School Type and Labor Market outcomes in Indonesia. World Bank Econ Rev 25(2):296-322. https://doi.org/10.1093/wber/lhr010
https://doi.org/10.1093/wber/lhr010
Pritadrajati DS (2022) From School to work: does Vocational Education improve Labour Market outcomes? An empirical analysis of Indonesia. Buletin Ekonomi Moneter Dan Perbankan 25(3):471-492. https://doi.org/10.21098/b
https://doi.org/10.21098/bemp.v25i3.1315
Psacharopoulos, G. (1996). Economics of education: A research agenda. Economics of Education Review, 15(4), 339-344. https://doi.org/10.1016/S0272-7757(96)00025-8
https://doi.org/10.1016/S0272-7757(96)00025-8
Puri, I. A. W. R. I., & Wicaksono, P. (2023). Pendidikan Vokasi dan Pengembalian Upah. Jurnal Ilmu Sosial Dan Humaniora, 12(1), 129-139. https://doi.org/10.23887/jish.v12i1.56689
https://doi.org/10.23887/jish.v12i1.56689
Sakellariou, C. (2006). Benefits of general vs vocational/technical education in Singapore using quantile regressions. International Journal of Manpower, 27(4), 358-376. https://doi.org/10.1108/01437720610679214
https://doi.org/10.1108/01437720610679214
Silliman M., & Virtanen H. (2022) Labor Market Returns to vocational secondary education. Am Economic Journal: Appl Econ 14(1):197-224. https://doi.org/10.1257/app.20190782
https://doi.org/10.1257/app.20190782
Singh S., & Parida J.K. (2022) Employment and earning differentials among vocationally trained Youth: evidence from field studies in Punjab and Haryana in India. Millennial Asia 13(1):142-172. https://doi.org/10.1177/097639962096430
https://doi.org/10.1177/0976399620964308
Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355-374. https://doi.org/10.2307/1882010
https://doi.org/10.2307/1882010
Ssenyonga M (2021) Imperatives for post COVID-19 recovery of Indonesia's education, labor, and SME sectors. Cogent Econ Finance 9(1):1911439. https://doi.org/10.1080/23322039.2021.1911439
https://doi.org/10.1080/23322039.2021.1911439
Suharno, Pambudi, N. A., & Harjanto, B. (2020). Vocational education in Indonesia: History, development, opportunities, and challenges. Children and Youth Services Review, 115(January), 105092. https://doi.org/10.1016/j.childyouth.2020.105092
https://doi.org/10.1016/j.childyouth.2020.105092
Tentua, M.N., & Winarko, E. (2020) Applying Data Mining to Analysis of Mismatch Between Education and Labor Market in Indonesia. IOP Conference Series: Materials Science and Engineering, 771, 012020. https://doi.org/10.1088/1757-899X/771/1/012020
https://doi.org/10.1088/1757-899X/771/1/012020
Torun, H., & Tumen, S. (2019). Do vocational high school graduates have better employment outcomes than general high school graduates? International Journal of Manpower, 40(8), 1364-1388. https://doi.org/10.1108/IJM-11-2017-0314
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 UNIMAS Publisher
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Copyright Transfer Statement for Journal
1) In signing this statement, the author(s) grant UNIMAS Publisher an exclusive license to publish their original research papers. The author(s) also grant UNIMAS Publisher permission to reproduce, recreate, translate, extract or summarize, and to distribute and display in any forms, formats, and media. The author(s) can reuse their papers in their future printed work without first requiring permission from UNIMAS Publisher, provided that the author(s) acknowledge and reference publication in the Journal.
2) For open access articles, the author(s) agree that their articles published under UNIMAS Publisher are distributed under the terms of the CC-BY-NC-SA (Creative Commons Attribution-Non Commercial-Share Alike 4.0 International License) which permits unrestricted use, distribution, and reproduction in any medium, for non-commercial purposes, provided the original work of the author(s) is properly cited.
3) For subscription articles, the author(s) agree that UNIMAS Publisher holds copyright, or an exclusive license to publish. Readers or users may view, download, print, and copy the content, for academic purposes, subject to the following conditions of use: (a) any reuse of materials is subject to permission from UNIMAS Publisher; (b) archived materials may only be used for academic research; (c) archived materials may not be used for commercial purposes, which include but not limited to monetary compensation by means of sale, resale, license, transfer of copyright, loan, etc.; and (d) archived materials may not be re-published in any part, either in print or online.
4) The author(s) is/are responsible to ensure his or her or their submitted work is original and does not infringe any existing copyright, trademark, patent, statutory right, or propriety right of others. Corresponding author(s) has (have) obtained permission from all co-authors prior to submission to the journal. Upon submission of the manuscript, the author(s) agree that no similar work has been or will be submitted or published elsewhere in any language. If submitted manuscript includes materials from others, the authors have obtained the permission from the copyright owners.
5) In signing this statement, the author(s) declare(s) that the researches in which they have conducted are in compliance with the current laws of the respective country and UNIMAS Journal Publication Ethics Policy. Any experimentation or research involving human or the use of animal samples must obtain approval from Human or Animal Ethics Committee in their respective institutions. The author(s) agree and understand that UNIMAS Publisher is not responsible for any compensational claims or failure caused by the author(s) in fulfilling the above-mentioned requirements. The author(s) must accept the responsibility for releasing their materials upon request by Chief Editor or UNIMAS Publisher.
6) The author(s) should have participated sufficiently in the work and ensured the appropriateness of the content of the article. The author(s) should also agree that he or she has no commercial attachments (e.g. patent or license arrangement, equity interest, consultancies, etc.) that might pose any conflict of interest with the submitted manuscript. The author(s) also agree to make any relevant materials and data available upon request by the editor or UNIMAS Publisher.
