Educational diversity and individual pay: the advantages of combining academic and VET graduates in the workplace

Abstract

This study analyzes how worker pay is related to educational diversity, i.e., diversity in the educational composition of work groups in terms of the different types of vocational and academic education. As previous research shows that various types of diversity have positive effects in the workplace, a positive effect due to ‘educational diversity’ also seems plausible. We provide novel empirical evidence on the relation between the educational diversity of work groups and productivity, or more precisely, individual workers’ pay. Using theoretical considerations drawn from diversity research, we develop hypotheses on the relation between a group’s educational diversity and individual workers’ pay. Drawing on an exceptionally large set of employer-employee data with more than 87,000 employers and 1,200,000 employees, we test our hypotheses and find that the educational diversity of work groups—and thus work groups with workers of different types of vocational and academic education—is positively related to individual workers’ pay. Thus, educational diversity in the form of a combination of academic and Vocational Education and Training (VET) graduates in the workplace seems to be advantageous for the workers involved. Our findings suggest that educational diversity is especially beneficial in groups with high levels of task complexity and shorter organizational tenure.