Labour Market Effects of Polytechnic Education Reform: The Finnish Experience

This paper evaluates the labour market effects of the introduction of the polytechnic education system in Finland. The reform transformed former vocational colleges gradually into polytechnics. Since the timing of the reform differed across schools, we can control for macroeconomic changes by comparing the performance of the polytechnic graduates to the performance of vocational college graduates who graduated at the same time, and to control for both time and the school fixed effects at the same time. We discover that both employment levels and earnings of post-reform graduates are significantly higher when compared to pre-reform graduates from the same schools. The effects of the polytechnic reform differ between the three largest fields. In the field of business and administration the effects from the reform have been overwhelmingly positive. This is in accordance with the fact that the polytechnic reform extended the length of education mostly in this field.