A broad field: Silke Anger and Bernd Fitzenberger on the importance of educational research at IAB

Educational research is an essential part of labour market and occupational research. At IAB, it is primarily, but by no means exclusively, conducted in the research unit “Education, Training, and Employment Over the Life Course”. In a joint interview, its head, Prof. Silke Anger, and IAB Director Prof. Bernd Fitzenberger provide insights into the relevant research activities of IAB – and explain where they see an urgent need for political action.

How did you get involved in educational research, Ms Anger?

Anger: Education plays a central role throughout the life course and is closely linked to economic and social success. I am therefore interested in the question of why some people acquire more education than others and what consequences this has for their labour market opportunities and income. Educational research in economics looks at how resources can be optimally distributed and how educational processes can be designed in order to achieve the best possible educational success for all people. After all, economically useful skills and abilities – the so-called human capital – are the key to individual and social prosperity.

And what was your path to educational research, Mr Fitzenberger?

Fitzenberger: As an economics student, I was initially irritated by the concept of human capital, but later I got convinced by the idea that education is an investment in one’s own abilities and thus in production possibilities of the society as a whole that later “pays off” – even if a purely economic concept of education does by no means capture all its aspects. Access to education is essential for equal opportunities in a society and can therefore help to reduce inequalities. However, higher education is generally associated with higher incomes, so educational differences explain an important part of earnings inequality in a society. The tension between these two mechanisms sparked my interest in educational issues early on as a labour market researcher.

Fitzenberger: Education is a key to economic advancement.

Where do you see IAB’s mission in the field of educational research?

Fitzenberger: Educational research focusing on its link to the labour market is at the core of IAB’s research mandate, with a strong focus on education and training before and during working life. Education is a key to economic advancement, which is why IAB studies in particular young people on basic income support. Above all, analyses of the transitions between school and the labour market, the labour market aspects of continuing vocational training and the educational outcomes of young people on basic income support are at the heart of educational research at IAB.

Anger: A central question is which support measures and funding programmes contribute to the best possible vocational training.

What aspects are important to you in vocational training research?

Anger: Vocational education and training concerns first and foremost making the right decision for an apprenticeship, a field of study or further vocational training. This is an important prerequisite for successful vocational training and subsequent success in the labour market. Individuals compare the costs and benefits of different educational alternatives based on their preferences, self-assessed abilities and expectations – often unconsciously – but do not have complete information. A central question is which support measures and funding programmes contribute to the best possible vocational training. In addition to the framework conditions at the state or establishment level, the individual’s willingness to pursue education throughout their entire working life is crucial to ensuring that vocational skills can actually be developed further.

Mr Fitzenberger, you personally have done a lot of research into the transition between school and vocational training or between tertiary education and the job market. How well do you think this transition works in Germany?

Fitzenberger: The German system of dual vocational training, with its combination of theoretical and practical skills, secures the next generation of skilled workers and is an international role model. However, it has been steadily losing importance for the last 15 years and the apprenticeship market has changed from an employer’s market to an applicant’s market. In the meantime, even the trend towards rising tertiary education has ended.

Why is that?

Fitzenberger: There are several reasons for the decline in the number of applicants for dual vocational training. The economic crisis of 2008/2009 and the Covid crisis have caused the number of applicants to plummet even more than the number of vacancies. Dual vocational training and universities are now struggling with rising drop-out rates, while the number of young adults who have not completed vocational training is increasing. The increased uncertainty caused by the Covid crisis has made it more difficult for many young people to decide upon how to enter the job market. Despite a high number of unfilled training places, many young people interested in apprenticeship training are unable to find a training position in their desired occupation. The matching problems in vocational training and higher education are increasing, and the transition is less successful than in the past, despite excellent labour market opportunities for young skilled workers.

Anger: In Germany, educational inequality is particularly strongly “inherited”.

Ms Anger, you do a lot of research into educational inequality. What problems does this pose for the labour market?

Anger: Educational inequality translates into unequal opportunities on the labour market, such as a higher risk of unemployment or lower wages for people with less education. In Germany, educational inequality is also particularly strongly “inherited”, meaning that children’s educational attainment depends very much on their parents’ educational background.

From an economic perspective, efficiency aspects are also very important: unequal educational opportunities mean that not everyone in the education system makes the best possible use of their potential skills. Restricted access to education means that people fall short of their potential labour market productivity to the extent that knowledge and skills would increase their individual productivity. To put it bluntly: gifted children from less educated homes are often unable to develop their full potential – and this potential is lost to the labour market. They could earn higher incomes and be less at risk of unemployment. In turn, the labour market lacks valuable skilled workers. Equal educational opportunities therefore help the economy as a whole and contribute to the prosperity of us all.

Anger: It is better to start early than to “repair” later.

Why are investments in education so important at a young age?

Anger: At a young age, investments in education can more easily compensate for differences in access to education. The disadvantage of children from families with a low socio-economic status begins long before they start school. In the early stages of life, existing differences are still comparatively small –but widen over the life course. Children still find it relatively easy to learn new skills and – thanks to the so-called multiplier effect – continue to benefit from additional educational activities years later, meaning that offers for early childhood education achieve a comparatively high return on investment in economic terms. It is therefore better to start early than to “repair” later, especially as the costs are higher at a later stage and success is less likely.

In your view, does this speak against increasing investment in education in later childhood and adolescence?

Anger: Not at all! Where deficits could not be prevented at an earlier stage, correspondingly higher investment in education should ensure that all young people leave the school system with a minimum level of basic skills and skills relevant to the labour market in order to be ready for training by secondary school at the latest. If young people do not graduate from school and fail to make the transition from school to working life, the costs of integration into the labour market and society increase many times over in later phases of life.

In a field experiment that you are conducting, online tutoring was offered to low-performing pupils. What effects did you notice?

Anger: In this study, we are investigating the effectiveness of an online tutoring programme in which low-performing students at secondary schools were offered free tutoring. This was offered by volunteer students who met with the young people via an online platform once or twice a week at individually arranged times over a period of three to four months. Around six months after the start of the programme, online tutoring showed a positive impact on school grades in mathematics and English, with effects of a similar magnitude to tutoring provided in face-to-face meetings. Online tutoring is therefore an effective, flexible and cost-saving measure to support students who need to catch up.

Anger: Career planning is an extremely complex process.

One important field of research within IAB’s educational research concerns vocational guidance and counselling for young people. Where do you see the greatest need for political action?

Anger: Due to the diverse and changing career opportunities and the different information, expectations and standards of young people and their personal environment, career planning is an extremely complex process. In addition, young people are often quite unsure about their own preferences and abilities, therefore needing support that is as tailored as possible when searching for and structuring career guidance information. This includes closer cooperation between schools and employment agencies and, for example, the expansion of youth employment agencies. It is also important to exchange data between different public institutions so that no young person is lost in the transition from school to the job market.

Fitzenberger: So far, gender stereotypes in career choices have been overcome too seldomly.

Fitzenberger: Concerning vocational guidance and counselling, young people – regardless of gender, migration background and parental education – should receive non-directive career counselling that is gender-sensitive and that informs about a broad spectrum of career choices. So far, gender stereotypes in career choices have been overcome too seldomly. This is still one of the reasons why young women are less likely to take up well-paid professions.

In your opinion, what support do young people need in order to make informed career decisions?

Anger: Young people need comprehensive and at the same time tailored information on job profiles, which should include further training and promotion opportunities in addition to job content, remuneration and other job characteristics. It is important to avoid overloading young people with information. Young people also need clarity about their preferences, a realistic assessment of their abilities and the skills to make informed decisions and implement them.

Fitzenberger: Young people should have the opportunity to try out their professional inclinations and test their chances at an early stage in order to make an informed career decision. The step from the school environment into a company or a field of study is a major hurdle for many. For this reason, contact with companies or universities should be further strengthened during the school years through trial internships at firms or information offers from universities. Internships have proven to be one of the most important sources of information for career guidance, giving pupils a first-hand experience into various work environments. In addition to internships lasting several days or weeks, these can also be one-day taster internships, for example as part of Girls’ or Boys’ Days.

Let’s take an example of a program to support trainees: so-called assisted training (assistierte Ausbildung), what does that mean?

Fitzenberger: This programme offers learning support during apprenticeship training to adolescents with lower school grades. However, the take-up of the programme is quite low and many companies are not aware of it, as shown by a recent IAB establishment survey. More outreach, unbureaucratic access with little hurdles and tailor-made offers as well as close coordination between companies and vocational schools are necessary in order to provide adolescents the needed learning assistance during apprenticeship through this programme.

When you look at the current vocational training system in Germany: what are your most important recommendations to politicians?

Fitzenberger: The German vocational education and training system offers a wide range of training possibilities and funding opportunities. In order to strengthen vocational education and training, the offers must be made more transparent and people must be put in a better position to actually make use of the existing offers. Vocational and further training require a great deal of patience of the individual: often personal returns are only realised after successful completion of the training. Advice tailored to the target group, positive incentives and support are also needed during the vocational training period. Otherwise, there is a high risk that people will accept a job as a helper rather than complete an apprenticeship or further training.

It is a fact that people have different learning abilities. To what extent should the vocational training system take this into account?

Anger: Adults and young people with weaker skills or multiple problems need tailored training and further education opportunities. The design of a training program must be such that a successful completion is feasible for people who have not been successful in the education system and are therefore reluctant to pursue further vocational training. If it is possible for someone who has not completed vocational training to acquire a training qualification while still in employment or for someone in a low-skilled job to successfully complete qualified vocational training, then this pays off strongly both for this person and for society as a whole.

On the other hand, there is need for education and training programmes tailor-made for high-performing applicants in order to attract and develop sufficiently qualified employees. Policymakers should make training and further education more attractive and strengthen cooperation and permeability between training, further education, and higher education. Against the backdrop of rapid technological change, it is also essential to make vocational training more flexible and to adapt the content of initial and further training accordingly.

Fitzenberger: Vocational training must adapt faster than in the past.

Is the vocational training system in Germany too sluggish in this respect?

Fitzenberger: The economy and the labour market are undergoing major transformations, primarily triggered by the three D’s: demographics, digitalisation, and decarbonisation. Vocational training must therefore adapt faster than in the past. The curricula in apprenticeship training and in further training courses must be regularly updated and must not be too narrowly designed in view of changing job content. As labour becomes increasingly scarce, it is crucial to increase productivity and employ workers in the areas in which they are most productive or in which society’s needs are greatest. To achieve this goal, effective education and training are of upmost importance.

DOI: 10.48720/IAB.FOO.20240617.02