Investment in vocational versus general schooling: evaluating China`s expansion of vocational education and laying the foundation for further vocational education evaluation

Publication Details

Rozelle, S, Park, A, Wang, S, Zhang, L, Rong, W, Song, Y, Loyalka, P and Shi, Y, 2015, Investment in vocational versus general schooling: evaluating China`s expansion of vocational education and laying the foundation for further vocational education evaluation, 3ie Grantee Final Report. New Delhi: International Initiative for Impact Evaluation (3ie)

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Scott Rozelle, Albert Park, Sangui Wang, Linxiu Zhang, Wang Rong, Yingquan Song, Prashant Loyalka,Yaojiang Shi
China, People's Republic of
East Asia and Pacific (includes South East Asia)
Vocational/ Technical Education & Training
Gender analysis
Equity Focus
Evaluation design
Instrumental Variables (IV), Randomised Control Trials (RCT)
3ie Final Grantee Report
3ie Funding Window
Open Window Round 2


This impact evaluation uses several variations in interventions to compare the impact vocational of education and general schooling on employment and education related outcomes.


A number of developing countries currently identify VET as a key approach to building human capital. For example, the promotion of VET at the high school level has become a policy priority among emerging economies such as Brazil, Indonesia, Mexico and China. Over the past decade, these countries have increased funding and enrolments in vocational high school, often in lieu of further increasing funding and enrolments for academic high school. The rationale underlying these policies is that increases in the proportion of vocational as opposed to academic high school enrolments can more effectively build human capital. Despite the increasing interest in VET among policymakers, there is surprisingly little evidence from developing countries as to whether vocational high school, especially in comparison to academic high school, actually helps students acquire specific and general skills.

Research questions

Are there relative returns to vocational versus regular high school education in China? To what extent do poor, rural students perceive financial constraints to further schooling? What is the effect of early commitment for financial aid (ECFA), i.e. a guarantee of financial aid for the next level of schooling (e.g. high school), if ECFA is given late in the educational track (a few months before students are eligible for matriculation to high school) on high school matriculation? What is the impact of ECFA given early in the educational track on poor, rural students’ dropout rates, plans to attend high school, and math achievement? What is the impact of providing information or career planning skills on dropout rates, academic achievement and plans to go to high school among grade 7 students in poor, rural areas in China? What is the impact of attending vocational versus academic high school on the dropout rates, specific skills and general skills of the average student that is attending academic and vocational high schools? Are there heterogeneous impacts of attending vocational versus academic high school on the dropout rates and skill levels of disadvantaged (low-income or low-ability) students? Does vocational high school lead to any absolute gains in specific and general skills?


A key policy question in developing countries, including China, is how to balance investments in vocational versus general education to support economic growth and reduce social inequality. So far, there is no conclusive evidence on the returns on investment in vocational education and training (VET) in developing countries.This study assesses the cost-effectiveness, impact and quality of the expansion of VET in China by evaluating VET interventions in the provinces of Gansu, Shaannxi, Hunan and Jiangsu. The authors combine experimental and quasi-experimental approaches, including RCTs, cluster RCTs, regression analysis and instrumental variables, to estimate the value added and returns on investment in VET education and to explore the extent to which the decision to enrol in VET depends on relative prices. Interventions evaluated include random allocation of vouchers, counselling and exams at a cluster level and tuition reduction at an individual level.The study uses data collected at the baseline and endline for each of the interventions assessed. The study estimates separately the impacts of the VET interventions for women, for the poor and by geographic location.

Intervention design

Intervention A and B are an expansion of enrolments in Vocational Education (A) and an expansion in student aid for Vocational Education (B)
Intervention C provided vouchers of varying amounts to junior high school students (in years 1+2) to attend VET programmes or academic high school.
Intervention D consisted of two interventions that provided counselling to students about schooling or employment.
Intervention E created and implemented standardized entrance or exit examinations as a public good for China’s VET system

Theory of change

As the economies of developing countries transition from lower value-added to higher value-added industries, their need for human capital increases. Higher value-added industries require a labor force with higher levels of skills. To build a future labor force equipped with higher levels of skills, policymakers in a number of developing countries are expanding access to high school and college.

Unfortunately, disadvantaged students in many developing countries attend high school at a much lower rate than advantaged students. In China, up to 25 per cent of students from poor, rural areas drop out even before completing junior high, compared to fewer than 3 per cent of junior high students from richer, urban areas (Yi et al., 2012; Mo et al., 2012). The most significant reason why disadvantaged students in developing countries drop out of junior high or do not go on to high school is that poor families cannot afford the costs of sending their children to high school. High school tuition fees in some developing countries are high, relative to the average income of households from poor, rural areas. High tuition fees are further accompanied by high (and often rising) opportunity costs of staying in school. Opportunity costs are especially a problem for students entering high school, since labor laws in many developing countries permit high school-age students to find employment.
Although students are not required to pay the high costs of high school until they decide to matriculate, high direct and indirect costs can affect disadvantaged students as early as the start of junior high school. As the costs of attending high school are big, poor students who are unable to pay for high school may forecast that their chances to attend are zero, no matter how much effort they exert. As a result, they may be less motivated to work hard or stay in school.

Evaluation design

The first part of the analysis for studying interventions A+B exploits variation (across time and region) in the exogenous expansion and tuition reductions within VET to provide estimates of how vocational versus general education affects early labour market outcomes. The second part of the analysis for interventions A+B takes advantage of academic high school eligibility cutoffs (based on entrance exam scores) to estimate the effects of attending vocational versus academic education on employment outcomes.
To study Interventions C and D, two randomised controlled trials were implemented. Intervention C provided vouchers of varying amounts to junior high school students (in years 1+2) to attend VET programmes or academic high school. Intervention D consisted of two interventions that provided counseling to students about schooling or employment. The first, (individual-level randomised controlled trial) gave information directly to (geographically-dispersed) students on a flash drive. The second (cluster-randomised controlled trial) trained junior high school teachers in academic counselling so they could help students make more informed schooling or employment decisions.

To assess the impact of attending vocational versus academic high school on student dropout rates, specific skills and general skills, the researchers conduct three types of analyses using longitudinal data: (a) ordinary least squares (OLS); (b) instrumental variable (or IV); and (c) matching analyses

Main findings

The consistent finding is that there is no evidence of positive returns to vocational education compared to general education. All estimates of the relative returns to vocational education are negative, with most results being statistically insignificant.

The study finds that neither the seventh grade nor the ninth grade ECFA programme had a significant and/or strong impact on behavior.
The seventh grade ECFA changed students’ plans to attend academic high school largely by solidifying student plans (reducing the number of students with no plans) but yielded no material changes in student behavior. The programme was not able to significantly increase matriculation into high school (either VET or academic high school). According to the findings, there were also no impacts on student dropout rates or academic achievement.

Evidence from the cluster randomised controlled trial suggests that information has negligible impacts on student outcomes and that counseling increases dropout and may lead to lower achievement.
Credit constraints are also likely to explain why poor, rural students are not affected by the interventions. High tuition fees may have discouraged students from attending high school, as attested by other studies that have found conditional cash transfers increased the likelihood that students would go to high school.

Students who attend vocational high school experience absolute reductions in their general skills. That is, not only does vocational high school fail to teach any new general skills, it causes students to lose general skills they learned in the past. Taken together, our findings indicate that the promotion of vocational schooling as a substitute for academic schooling may in fact be detrimental to building human capital in developing countries such as China.

In terms of policy implications, the results suggest that if the government is interested in providing poor students opportunities to go to high school, the interventions to get them to go to high school need to be more creative and focus on other activities rather than offering ECFA-like funding during junior high school. Actions that might make poor rural students more competitive in junior high school or even elementary school might be more effective in competitive systems such as those in China. Of course, more research is needed before the effectiveness of such programmes can be validated.


Relevant publications (published and forthcoming):

Liu, C.F., Yi, H.M., Luo, R.F., Bai, Y.L., Zhang, L.X., Shi, Y.J., Wang, H., Chu, J., Rozelle, S. (2013). “The Effect of Early Commitment of Financial Aid on Matriculation to Senior High School among Poor Junior High Students in Rural China.” Submitted to China Economic Review.

Yi, H.M., Song, Y.Q., Liu C.F., Huang, X.T., Zhang, L.X., Yao, S.J, Bai, Y.L., Yang, C., Wang, H., Loyalka, P., Chu, J., Rozelle, S. (2013). “Do conditional cash transfers impact the educational attainment and achievement of poor junior high school students in China?” Resubmitted: Journal of Development Economics.

Loyalka, P., Huang, X.T., Zhang, L.X., Wei, J.G., Yi, H.M., Song, Y.Q., Ren, B.P., Yao, S.J, Maani, M., Chu, J. Rozelle, S. (2013). “The Impact of Vocational Schooling on Human Capital Development in Developing Countries: Evidence from China.” Submitted to World Bank Economic Review.

Johnston, J., Loyalka, P., Chu, J., Rozelle, S. (2013). “The Importance of Dual-Certificates and Employer Experience in Vocational High School Teacher Effectiveness.” Working Paper, Stanford University, Palo Alto.

Yao, J., Yi, H.M., Zhang, L.X., Shi, Y.J., Chu, J., Loyalka, P., Rozelle, S. (2013). “Exploring Dropout Rates and Causes of Dropout in Upper-Secondary Vocational Schools in China.” Submitted to International Journal of Economic Development.

Yi, H.M., Zhang, L.X., Liu, C.F., Yue, A., Yang, C., Chu, J., Loyalka, P., Maani, M., Wei, J.G. (2013).“A Report Card: How Are Secondary Vocational Schools in China Measuring Up to Government Benchmarks?” China World and Economy.

Loyalka, P., Liu C.F., Song, Y.Q., Yi, H.M., Huang, X.T., Wei, J.G., Zhang, L.X., Yao, S.J, Chu, J., Rozelle, S. (2013). “Can Information and Counseling Help Students from Poor, Rural Areas Go to High School? Evidence from China.” Journal of Comparative Economics.

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