How routine tasks affect labor market inequalities between vocational and tertiary graduates over the career

Abstract

How do routine tasks shape disparities in income and employment prospects between workers with vocational and tertiary educational qualifications? Whereas existing research predominantly emphasizes skill differentials as the primary driver, this study proposes that group differences in the prevalence and returns to routine tasks contribute to existing disparities. Using decomposition methods on data from the German Socio-Economic Panel and the BiBB/BAuA Employment Survey, we examine how compositional differences in routine task performance between vocational and tertiary graduates impact disparities in labor market outcomes over workers’ careers. We find that vocationally trained workers, on average, perform more routine tasks than their university-educated counterparts. This compositional difference explains 11% of the income gap between both groups but does not matter for unemployment risk. Over the career, group-specific levels of task routineness remain surprisingly stable for both groups. However, the returns to routine tasks diminish with age, disproportionately affecting vocationally trained workers due to higher average routine scores and contributing substantially to the widening income gap between vocational and tertiary graduates over their careers.