The role of vocational education on unemployment in Indonesia

In 2006, the Government of Indonesia began a national program of vocational high school expansion in Indonesia. Since then, the number of vocational high school graduates has been increasing significantly. The purpose of this study is to examine the role of vocational education on the probability of unemployment in developing countries using the case of Indonesia. We include demographic factors of age, squared age, gender, location of residence and marital status as control variables. This study uses cross-section data from the Indonesian National Labor Force Survey of August 2019. We restrict our sample to individuals with secondary high school as their highest education level. With binary dependent variable of unemployment status, we employ logit and probit estimation model in our estimation. The estimation results show that individuals with vocational education have a statistically significant lower probability of being unemployed contrasted to those individuals with non-vocational education. However, further analysis of the unemployment rates of vocational high school graduates by age shows that the case might not be applicable to recent graduates of vocational high school. Meanwhile, the control variables of age, age squared, gender, location of residence and marital status show the expected signs.