Patrick Emmenegger

Dual vocational education and training (VET) systems are said to lead to lower youth unemployment. Some research has also linked dual VET to lower wage inequality. Yet, recent contributions suggest that the technological and organizational changes associated with the rise of the knowledge economy undermine the beneficial effects of dual VET. Most notably, employment in routine-task-intensive occupations is declining due to automation, whereas technological change increases demand for non-routine cognitive tasks. For such high-end jobs, college-educated workers with general skills are argued to be better suited. This paper provides the first evidence on the effect of dual VET on youth unemployment and wage inequality in mature knowledge economies. We have assembled a new panel data set for 37 advanced economies from 1996 to 2020. We find that dual VET remains associated with lower youth unemployment and wage inequality throughout the entire period. The rise of the knowledge economy is positively associated with youth unemployment at low levels of dual VET. However, where the dual VET share is high, the rise of the knowledge economy further reduces youth unemployment. In contrast, the negative effect of dual VET on wage inequality is not affected by the rise of the knowledge economy. Our paper significantly extends existing research on the effects of dual VET by explicitly theorizing and modelling its interaction with the knowledge economy. Contrary to the fears often espoused in the literature, we find no evidence that the knowledge economy undermines the beneficial effects of dual VET.

Skill formation systems that emphasize firm-based vocational education and training (VET) are said to lead lower youth unemployment. Some research has also linked firm-based VET to lower wage inequality. Yet, recent contributions suggest that the technological and organizational changes associated with the rise of the knowledge economy undermine the beneficial effects of firm-based VET. Most notably, employment in routine-task-intensive occupations is declining due to automation, whereas technological change increases demand for non-routine cognitive jobs carried out in high-end jobs. For such jobs, collegeeducated workers with general skills are argued to be better suited. Such developments do not bode well for firm-based VET systems, which traditionally focus on routine-task-intensive occupations. This paper provides the first evidence on the effect of firm-based VET on youth unemployment and wage inequality in mature knowledge economies. We have assembled a new panel data set for 37 advanced economies from 1996 to 2020. We find that firm-based VET remains associated with lower youth unemployment and wage inequality throughout this period. The rise of the knowledge economy (operationalized as patenting activity in the ICT and artificial intelligence fields) is positively associated with youth unemployment and wage inequality at low levels of firm-based VET. However, where the firm-based VET share is high, the rise of the knowledge economy further reduces youth unemployment and wage inequality. Our paper significantly extends existing research on the effects of firm-based VET by explicitly theorizing and modelling its interaction with the knowledge economy. Contrary to the fears often espoused in the literature, we find no evidence that the knowledge economy undermines the beneficial effects of firm-based VET. Rather, our findings suggest that a strong firm-based VET sector combined with a knowledge-based economy contribute to lower youth unemployment and lower wage inequality.

How does automation risk affect social policy preferences? We advance the lively debate surrounding this question by focusing on the moderating role of education and training institutions. In particular, we develop a theoretical argument that foregrounds the role of dual VET systems. While existing literature would lead us to expect that dual VET systems increase demand for compensatory social policy and magnify the effect of automation risk on such demand, we contend that the opposite holds true. We hypothesize that dual VET systems weaken demand for compensatory social policy and dampen the effect of automation risk on demand for compensatory social policy through three non-mutually exclusive mechanisms that we refer to as (i) skill certification; (ii) material self-interest; and (iii) workplace socialization. Analyzing cross-national individual data from ESS, fine-grained data on individual educational background from the German ESS module as well as national-level OECD data on education and training systems, we find strong evidence in favor of our argument. The paper does not only advance the debate on social policy preferences in the age of automation but it also sheds new light on an old debate, namely the relationship between skill "specificity" and social policy preferences.