Vocational education of owners and SME employment growth: evidence from Israel

ABSTRACT

OECD data show that in some countries the earnings of workers with tertiary vocational education are lower than those of workers with secondary education, in particular for the 25–34 years age group. Israel is one of those countries, and in this study we extend the analysis of this apparent anomaly using a quantitative methodology of multiple regression analysis and a survey of 699 SMEs through telephone interviews and a web-based questionnaire. We explored the employment growth rates of firms whose owners have secondary, academic and post-secondary vocational education. Findings show that compared to the base level of the owner’s secondary education, the growth of businesses whose owners have academic education is higher, while vocational education of the owner is associated with lower growth. These findings can be explained by the specific skills acquired through vocational training which may not adequately fit the changing job market and business ecosystem.

KEYWORDS:

• Vocational education and training
• OECD salaries
• small and medium enterprises
• business growth
• returns to education

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Eli Gimmon

Eli Gimmon is a professor of entrepreneurship and strategy at Tel-Hai College in Israel. He received Ph.D. in entrepreneurship at the University of Strathclyde, Glasgow, UK. His academic interests emerged from 22 years of field experience, including co-founding two American–Israeli IT companies and managing intra-preneurship at a leading Israeli international electronic corporation. He is a reviewer for several journals such as Research Policy, Entrepreneurship Theory and Practice and Industrial Marketing Management.

Yanay Farja

Yanay Farja received his Ph.D. in Agricultural and Resource Economics from the University of California, Berkeley. He is currently a lecturer in the Department of Economics and Management at Tel-Hai College in Israel. His main field of research is environmental economics, where he has studied land use designations and their effect on real estate markets. His current research addresses equity implications of environmental policies, regional development and the interface between agriculture and the environment.

Zeevik Greenberg

Zeevik Greenberg is a senior lecturer in the Human Resources Department at Tel-Hai College. He received his Ph.D. in human geography at the University of Haifa. His research area focuses mainly on rural area development, new immigrants to rural areas, and the the employment and livelihood changes in the rural and peripheral areas. He is a research fellow at the Institute for the research of the Kibbutz and the Cooperative Idea in the University of Haifa. He has served as an advisor to various committees of regional municipalities in northern Israel and the Ministry for Development of the Negev and Galilee, dealing with re-defining and re-structuring rural communities.