The composition of applicants, mismatch, and matching efficiency in the German VET market

Abstract

Entries into firm-based vocational education and training (VET) stagnated in Germany during the 2010s and decreased by 11% between 2019 and 2020, which is likely to exacerbate future shortages of skilled workers. Against this backdrop, we study the VET market through the lens of a matching function estimated at the occupation by district level between 2013 and 2021. We employ a novel strategy to instrument for applicants and vacancies which draws on differences in local labor market conditions for different occupations. Our estimated matching elasticities for applicants and vacancies are 0.46 and 0.57, respectively. Matching efficiency shows a slight downward trend before Covid and a large drop during Covid. Using our estimates to decompose aggregate trends in matches, we find that while matching efficiency and applicants drove matches down before Covid, the increase in vacancies until 2019 stabilized the VET market. During Covid, the drop in applicants, vacancies, and matching efficiency contributed similarly to the sudden drop of matches. Furthermore, without the increase in migrants applying to VET positions, demographic change alone would have led to an even greater decline in matches already before Covid. Changes in occupational and regional mismatch did little in explaining the overall trend in matches. © 2025 The Authors

Keywords

Author Keywords

demographics Applicants’ composition Matching function Mismatch VET market

Index Keywords

Author Affiliations

IAB, Berlin, Germany, Friedrich-Alexander-Universität Erlangen-Nürnberg, Erlangen, Bayern, Germany, IFS, United Kingdom, CESifo GmbH, Munich, Bayern, Germany, IZA, Nurnberg, Germany, ROA, Maastricht, Netherlands

IAB, Berlin, Germany

CERGE-EI Center for Economic Research and Graduate Education - Economics Institute, Prague, Czech Republic

Funding & Acknowledgements

Scottish Economic Society

We thank the editor and referees for their valuable feedback. Further we thank participants of the Swiss Leading House Conference on the Economics of Vocational Education and Training, the IAB-Liser conference, the ESRA conference, the BIBB-IAB-ROA Workshop, the Annual Conference of the Royal Economic Society, the Scottish Economic Society Annual Conference, the AG BFN workshop of BIBB and IAB, the COMPIE Conference, the SYRI workshop at CERGE-EI, the VfS Annual Conference, the ELMI conference, the EALE 2024 conference, the Ph.D. Workshop \u201CPerspectives on (Un-)Employment\u201D, the ESPE 2025, the ROA Learning and Work Seminar, and internal IAB seminars for useful comments. This output was supported by the NPO \u201CSystemic Risk Institute\u201D no. LX22NPO5101 , funded by European Union \u2013 Next Generation EU (Ministry of Education, Youth and Sports, NPO: EXCELES). All remaining errors are our own.

European Commission, EU

We thank the editor and referees for their valuable feedback. Further we thank participants of the Swiss Leading House Conference on the Economics of Vocational Education and Training, the IAB-Liser conference, the ESRA conference, the BIBB-IAB-ROA Workshop, the Annual Conference of the Royal Economic Society, the Scottish Economic Society Annual Conference, the AG BFN workshop of BIBB and IAB, the COMPIE Conference, the SYRI workshop at CERGE-EI, the VfS Annual Conference, the ELMI conference, the EALE 2024 conference, the Ph.D. Workshop \u201CPerspectives on (Un-)Employment\u201D, the ESPE 2025, the ROA Learning and Work Seminar, and internal IAB seminars for useful comments. This output was supported by the NPO \u201CSystemic Risk Institute\u201D no. LX22NPO5101 , funded by European Union \u2013 Next Generation EU (Ministry of Education, Youth and Sports, NPO: EXCELES). All remaining errors are our own.

Royal Economic Society, RES

We thank the editor and referees for their valuable feedback. Further we thank participants of the Swiss Leading House Conference on the Economics of Vocational Education and Training, the IAB-Liser conference, the ESRA conference, the BIBB-IAB-ROA Workshop, the Annual Conference of the Royal Economic Society, the Scottish Economic Society Annual Conference, the AG BFN workshop of BIBB and IAB, the COMPIE Conference, the SYRI workshop at CERGE-EI, the VfS Annual Conference, the ELMI conference, the EALE 2024 conference, the Ph.D. Workshop \u201CPerspectives on (Un-)Employment\u201D, the ESPE 2025, the ROA Learning and Work Seminar, and internal IAB seminars for useful comments. This output was supported by the NPO \u201CSystemic Risk Institute\u201D no. LX22NPO5101 , funded by European Union \u2013 Next Generation EU (Ministry of Education, Youth and Sports, NPO: EXCELES). All remaining errors are our own.

Grant: LX22NPO5101

We thank the editor and referees for their valuable feedback. Further we thank participants of the Swiss Leading House Conference on the Economics of Vocational Education and Training, the IAB-Liser conference, the ESRA conference, the BIBB-IAB-ROA Workshop, the Annual Conference of the Royal Economic Society, the Scottish Economic Society Annual Conference, the AG BFN workshop of BIBB and IAB, the COMPIE Conference, the SYRI workshop at CERGE-EI, the VfS Annual Conference, the ELMI conference, the EALE 2024 conference, the Ph.D. Workshop \u201CPerspectives on (Un-)Employment\u201D, the ESPE 2025, the ROA Learning and Work Seminar, and internal IAB seminars for useful comments. This output was supported by the NPO \u201CSystemic Risk Institute\u201D no. LX22NPO5101 , funded by European Union \u2013 Next Generation EU (Ministry of Education, Youth and Sports, NPO: EXCELES). All remaining errors are our own.

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The composition of applicants, mismatch, and matching efficiency in the German VET market

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