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This paper questions the widespread view that having an upper secondary diploma results in higher earnings. Using unique and complete administrative panel data from vocational education in the Netherlands, we compare the earnings of high school graduates to the earnings of high school dropouts. Hereby, we exploit an educational policy reform in 2007 in which the compulsory education age was extended from the age of 17 until the age of 18 years. In contrast to the widespread view, our findings suggest that obtaining a vocational diploma does not lead to significantly higher earnings. We find a small effect of 2.4% that is not statistically significant. We suggest modularization as a potential mechanism to explain zero returns to schooling. A modular vocational system may result in students enhancing their productivity in some parts of the curriculum needed to reside in the labour market, without obtaining the actual qualification.
