Vocational education and employment outcomes in Ethiopia: displacement effects in local labor markets

Vocational education has been identified as an important policy domain to address youth unemployment, but empirical evidence is scarce. This paper estimates the effects of vocational education on employment outcomes in Ethiopia, where institutional reform has been implemented for the last decade. Compared to workers with secondary general education, effects on the probability of workers with entry-level vocational education having full-time work, permanent jobs, and formal jobs are not significantly positive. We also find the presence of displacement effects of expansion of vocational education on less educated workers. The estimate indicates that a 10% increase in graduates of vocational education in a local labor market, reduces the probability of having a formal job by 4.9% for male secondary graduates. Further expansion of vocational education may cause more adverse welfare impacts on less educated workers