An in-depth analysis of the returns to National Vocational Qualifications obtained at Level 2

Recent government policy has focused on helping low-skilled individuals obtain a Level 2 qualification. Previous work using the Labour Force Survey has however found that controlling for other qualifications achieved, individuals holding low-level National Vocational Qualifications (NVQs) have statistically significantly lower wage levels than otherwise similar individuals who lack NVQs, the estimates for NVQs at level 1 and 2 falling between 5 and 20 percent lower wages.

In this paper, we offer an in-dept investigation of NVQ qualifications, trying to shed some light as to why a seemingly beneficial certification of skill appears to hurt labour market prospects. We principally look at NVQs obtained at level 2 given that they are the most widely held of the NVQ qualifications, but will also touch on NVQs at level 1. While we focus on wages, we also investigate whether NVQs are a stepping-stone to higher levels of qualifications or serve to boost employment probabilities. Finally, we compare the returns to NVQ2s to the returns for other level 2 vocational qualifications.