University Degrees Continue to Pay Off – Apprenticeships Regain Appeal // ZEW Study on Wage Gaps after Higher Education Expansion

ZEW Study on Wage Gaps after Higher Education Expansion

Apprenticeships are regaining appeal as many companies offer higher wages to be more attractive on the job market. This is shown in a study by ZEW Mannheim and DZHW Hanover.

The higher the level of education, the higher the wages. This statement still holds true today, even though the wage gaps between academic and vocational qualifications have been narrowing for some time. This trend is making vocational professions more attractive again, as revealed by a study on the impact of the expansion of higher education, i.e. the increasing percentage of university entrants, conducted by ZEW Mannheim in collaboration with the German Centre for Higher Education Research and Science Studies (DZHW). The researchers illustrate how the wage gaps between individuals with university degrees and those with vocational training have evolved separately for women and men from 1996 to 2021, using data from the Socio-Economic Panel (SOEP).

"Since 2015, the number of university graduates has only slightly increased. At the same time, the wage gap with individuals holding vocational qualifications has decreased, reaching mid-90s levels for women. This is the period when the wage gap started to rise, and the academisation of women advanced. The narrowing wage gap with workers who have completed an apprenticeship initially acts as a disincentive to further expansion of higher education. Nevertheless, a university degree still promises a decent educational return for many young people," explains Dr. Jessica Ordemann, co-author and researcher at the German Centre for Higher Education Research and Science Studies in Hanover.

PD Dr. Friedhelm Pfeiffer, co-author and deputy head of ZEW's "Labour Markets and Social Insurance" Unit, highlights the advantages of a traditional apprenticeship: "Apprenticeships are regaining appeal as many companies offer higher wages to be more attractive on the job market. Therefore, it is the responsibility of both policymakers and companies to continue to enable young people to embark on sustainable and long careers against a background of changing skill requirements and new challenges, by investing sufficiently in academic and vocational education."