“In Ireland, Great Britain, the Netherlands, Slovenia, Slovakia and Poland, there are income differences of more than ten per cent. In these countries, dropouts earn significantly more than employees with an intermediate level of education,” says Bolz. For most of the countries considered, however, no evidence of such wage differences have been found. In Europe, dropouts rarely earn more than employees who have completed vocational training or obtained a comparable school-leaving qualification. A cross-country comparison reveals further differences: while people with a university degree in Denmark earn about ten per cent more than dropouts, the figure is around 35 per cent in Cyprus, Germany and Poland. “These large disparities between individual countries are likely to result from differences in labour market flexibility and the number of university graduates. In a country that has stricter employment protection laws and many university graduates, dropouts do not earn more than workers with vocational training or a comparable school-leaving qualification,” says Berlingieri.
According to the ZEW study, the employees’ gender and the sector in which they work also have an influence on income. “The income gap between university graduates and dropouts is greater for female employees than for male ones. This is likely due to the higher share of part-time employment among women,” says Berlingieri. Moreover, dropouts are better paid in the private sector than in the public sector. This could be related to the fact that formal degrees are more important in the public sector, explains the ZEW researcher.
Dropouts do not have better employment opportunities in European labour markets
In Europe, dropouts are on average nine per cent less likely to be employed than people who have completed their studies. While evidence of this was not found for Italy, Greece and Belgium, the difference in employment opportunities was even more pronounced in Poland, Denmark and Germany, at more than 13 percentage points. Comparing dropouts and employees with completed vocational training or a comparable school-leaving qualification, it can be seen in most European countries that the former do not have better chances of finding employment.
The ZEW study suggests that university dropout is particularly problematic if a high dropout rate coincides with dropouts earning low incomes. This is the case, for example, in Italy and the Czech Republic. “In these countries, policymakers should focus more on measures that increase the likelihood of successful completion of studies. Providing students with more intensive counselling or issuing a certificate of higher education qualification, as is done in Great Britain after only one year of attending university, could prevent dropouts,” explains Berlingieri.
About the study
The ZEW study compares data on dropouts, university graduates and employees with vocational training or a comparable school-leaving qualification in 18 European countries. The sample comprises around 24,600 participants between the ages of 25 and 64 from the Programme for the International Assessment of Adult Competencies (PIAAC). Demographic characteristics, labour market status, earnings, experience, education and dropout were analysed for the study. In addition, country-specific characteristics regarding the education system and labour market regulations were taken into account to find possible explanations.