The Annenberg Institute at Brown University offers this national working paper series to provide open access to high-quality papers from multiple disciplines and from multiple universities and research organizations on a wide variety of topics related to education. EdWorkingPapers focuses particularly on research with strong implications for education policy. EdWorkingPapers circulates papers prior to publication for comment and discussion; these papers have not gone through a peer review processes. Contributors can update papers to provide readers with the most up-to-date findings.
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Vocational Education and Training (VET) programs are prevalent in a European context, but often struggle with drop-out rates that exceed those of general upper-secondary education. Using Danish administrative data, we study the effects of reform-induced reductions in shares of VET students who did not pass their lower secondary final exams on passing GPA VET students. We find that passing students have a higher probability of remaining enrolled in VET after the first year of studies when entering a VET school with a higher share of below-passing peers. Studying outside options, we find that students become less likely to drop out of education entirely. The results are consistent with models of peer effects in which particularly unmotivated students become points of comparison for their peers, increasing their motivation and likelihood of remaining enrolled.