Joris Ghysels, Zoltán Hermann, Iryna Rud and Melline Somers   
The effect of increased general education in vocational schools – Evidence from a Hungarian vocational school reform

This paper aims at the evaluation of the reform of vocational education introduced in 1998 in Hungary. The reform extended the duration of education by one year, and increased teaching time spent on non-vocational subjects. The reform affected two of the three tracks in upper-secondary education in Hungary, vocational secondary school and vocational school. We estimate the effect of the reform on educational attainment, employment and wages in a comparative interrupted time series (CITS) framework, using the academic track and secondary school drop-outs as control groups. The results suggest that the reform has had heterogeneous effects. First, we detect no effect for the vocational secondary track, while the reform has improved labour market outcomes of vocational school students. Second, in the vocational school group the reform has increased men’s wages, while not affected their employment. For women we found a positive employment effect, while wages have increased only for the younger cohorts.


Sofie Cabus – Eszter Nagy
Performance of Hungarian firms: are apprentices an asset or a liability?
Evidence from a unique matched employer-employee dataset

Hungarian legislation provides firms with financial incentives to train apprentices from vocational training schools. In line with these incentives, it is observed that firms increasingly train apprentices over the period 2003-2011, in particular, in the sectors manufacturing, construction, wholesale and retail and hotels and restaurants. However, at the same time, it is observed that firms decreasingly retain the trained apprentices in these four sectors. This finding leads to the hypothesis that apprentices are not profitable in the long run. The formulated hypothesis is known in the previous literature as the ‘substitution strategy’. This recruiting strategy is particularly observed among firms that replace their low-skilled labour with apprentices in order to reduce the cost of wages. For these firms it is not beneficial to hire an apprentice after accomplishing his training, because then he becomes a low-skilled worker paid at higher wages. This paper investigates the effect of the share of days worked by apprentices on productivity and gross profits of Hungarian firms by using a unique matched employer-employee dataset. Different approaches that allow us to estimate the effect are discussed among which fixed effects first-difference models and system GMM. The results indicate that apprentices decrease productivity and gross profits of Hungarian firms. These negative effects on firm performance were more prominent and robust before (2003-2007) than after the financial crisis (2008-2011).


Anna Lovász, Ewa Cukrowska-Torzewska, Mariann Rigó, Ágnes Szabó-Morvai, Andrea Kiss
One Size Fits All? Gender Differences in the Effect of Subjective Feedback

The effect of objective feedback on performance is often studied, while subjective feedback is largely neglected in the economics literature. We estimate the impact of positive subjective feedback – encouragement and praise – on effort and performance, and compare the effect by gender. We use a computer game, during which players are randomly chosen to be given either no feedback (control) or positive subjective feedback (treatment), and analyze the treatment effect on effort (clicks) and performance (score). Based on previous economic and psychology theories, we test the pathways through which subjective feedback can have an impact: on (1) effort, due to the updating of expected performance or direct (dis)utility from the feedback, or (2) marginal productivity. The results point to significant differences in the mean effects of subjective feedback by gender. For women, encouragement has a significant positive effect while praise has a significant negative effect on performance, while men are less responsive to subjective feedback in general. Gender differences are mostly explained by different confidence distributions, while there are no gender differences in treatment effects if confidence level is held fixed. The effects are mostly realized through changes in effort. These results suggest that better targeted supervisory communication in schools or workplaces can improve the performance of lower-confidence individuals and thereby decrease the gender gap in performance.


Fritz Schiltz, Chiara Masci, Tommaso Agasisti and Daniel Horn
Using Machine Learning To Model Interaction Effects In Education: A Graphical Approach

Educational systems can be characterized by a complex structure: students, classes and teachers, schools and principals, and providers of education. The added value of schools is likely influenced by all these levels and, especially, by interactions between them. We illustrate the ability of Machine Learning (ML) methods (Regression Trees, Random Forests and Boosting) to model this complex ‘education production function’ using Hungarian data. We find that, in contrast to ML methods, classical regression approaches fail to identify relevant nonlinear interactions such as the role of school principals to accommodate district size policies. We visualize nonlinear interaction effects in a way that can be easily interpreted.


Ágnes Szabó-Morvai and Anna Lovász
Childcare and Maternal Labor Supply – a Cross-Country Analysis of Quasi-Experimental Estimates from 7 Countries

Evidence from single country studies suggests that the effect of subsidized childcare availability on maternal labor supply varies greatly by institutional context. We provide estimates of the childcare effect around age 3 of children for 7 EU countries, based on harmonized data and the same quasi-experimental methodology, and evaluate their cross-country variation in light of key institutional factors (leave policies, labor market characteristics, cultural norms). The identification of the childcare effect utilizes birthdate-based kindergarten eligibility cutoffs specific to each country in an instrumental variables approach. We combine data on mothers from the EU-LFS, eligibility cutoffs gathered from country experts and verified using further datasets, and country-level institutional characteristics from various sources. We discuss the role of the context, timing, and the point of estimation. The results suggest that the childcare effect is the highest in CEE countries, where at this child age, maternal participation is still relatively low compared to that of mothers with older children, and leaves with job protection are just ending. We find less evidence of an impact in Southern EU countries, where leaves end at a much earlier age, and maternal participation at older child ages is low. Western EU countries also show some impact, despite the already high maternal participation rates prior to this age. Specific policy implications are derived from the results in light of the EU Barcelona targets for childcare expansion under age 3.

© 2016 EdEN Project