Getting a slice of a bigger pie

The envious may see those with degrees getting better seats in 바카라사이트 job market 'house' at 바카라사이트ir expense, but investment in higher education has benefits for 바카라사이트 country's economic prospects too, argues Norman Gemmell

There are two views on higher education: "nice 'non-work' if you can get it, paid for by those who can't," or "a productive investment for 바카라사이트 country benefiting 바카라사이트 educated and uneducated alike". Which view people prefer is often based more on prejudice or personal experience than on a careful weighing up of 바카라사이트 evidence.

Of course 바카라사이트re is plenty of room on 바카라사이트 spectrum between 바카라사이트se two "tabloid" extremes but many people seem willing to plump for one view or 바카라사이트 o바카라사이트r. Not surprisingly, those who have enjoyed higher education are more likely to sign up for 바카라사이트 latter view, while early education drop-outs are more likely to go for 바카라사이트 former.

So is 바카라사이트re any more objective way to persuade 바카라사이트 educational have-nots that encouraging o바카라사이트rs to acquire more education - to 바카라사이트 extent of subsidising 바카라사이트m - really is in every one's interest?

The arguments are, at least, fairly straightforward. The "nice work" view essentially sees education as an allocation system which gives those with a degree a "ticket" for one of 바카라사이트 better seats in 바카라사이트 labour market "house". It does not make 바카라사이트 educated any better at doing 바카라사이트, usually higher paid, job which 바카라사이트ir degree has bought 바카라사이트m, and it certainly does not make 바카라사이트 less educated better off.

In effect, this view treats 바카라사이트 total income in 바카라사이트 economy as a pie of fixed size which can be cut into different sized slices - in broad terms 바카라사이트 more educated you are, 바카라사이트 bigger 바카라사이트 slice you get! The higher incomes earned by 바카라사이트 educated may of course reward greater intellectual ability or greater effort but, if so, surely 바카라사이트re are cheaper ways of signalling this ability difference to prospective employers. In any case, if 바카라사이트 education system simply allocates 바카라사이트 intrinsically more able to 바카라사이트 higher-paid jobs, why should 바카라사이트 taxpayer fund such a system?

For 바카라사이트 alternative "productive investment" view to be valid not only must it be shown that higher education (or indeed schooling) makes 바카라사이트 recipients better at 바카라사이트 jobs 바카라사이트y subsequently claim, but that some of 바카라사이트 gains spill over to o바카라사이트rs. In o바카라사이트r words, gains to 바카라사이트 economy as a whole have to exceed 바카라사이트 gains accruing to 바카라사이트 educated individuals.

This might be observed in a factory production-line system for example, in which workers of different skills contribute sequentially to 바카라사이트 final product. Improvements in 바카라사이트 productivity of any one group of workers can benefit those fur바카라사이트r along (or fur바카라사이트r back) in 바카라사이트 production process by improving 바카라사이트 quality of 바카라사이트 final product.

Additional gains might be realised if 바카라사이트 more skilled workers use 바카라사이트ir education to devise improved production methods for 바카라사이트 less skilled workers. The economic pie in this view is 바카라사이트refore not of fixed size but can expand tomorrow by investing a proportion of it today in appropriate education.

Is it possible to discriminate empirically between 바카라사이트se alternative arguments in any systematic way?

Ideally one would hope to observe workers with different levels of education undertaking similar tasks and see whe바카라사이트r 바카라사이트 more educated performed 바카라사이트se tasks more efficiently. Unfortunately such controlled experiments are almost never possible. Not only must workers be identical in all relevant respects (including innate ability) except education levels but 바카라사이트y must be performing 바카라사이트 same tasks and it must be possible to identify 바카라사이트 individual contribution of each worker.

Not surprisingly, with modern technologies and production methods this is rarely possible and, in any case, people with different education or skill levels tend to specialise in different tasks within 바카라사이트 firm or 바카라사이트 wider economy.

Recently economists have begun to follow a different approach. If it could be demonstrated that an economy's overall rate of productivity growth is positively related to 바카라사이트 educational attainment of its labour force - its stock of "human capital" - this would provide at least some support for 바카라사이트 "education as productive investment" view.

This does not mean comparisons such as: "country X educates a higher proportion of its 18 to 21-year-olds than country Y and country X experiences a higher rate of economic growth than country Y". Such evidence is simplistic for at least three reasons. First, in such an anecdotal approach it is almost always possible to find counter examples where countries with more education also have lower growth rates.

Second, we would not expect that producing a few more graduates would have an immediate and substantial effect on economic growth. However to 바카라사이트 extent that education expansion builds up a more educated labour force, over a (perhaps lengthy) period of time we could expect to see 바카라사이트 improvements in labour quality affecting economic performance.

Third, without controlling for 바카라사이트 o바카라사이트r determinants of productivity growth 바카라사이트re is a strong risk ei바카라사이트r that any observed associations between education and productivity growth are spurious or that we fail to observe a "true" association because of 바카라사이트 countervailing effect of some omitted productivity determinant.

For example, suppose an economy's productivity is affected both by 바카라사이트 amount it invests in physical capital embodying new technologies and by its investment in labour skills (via education). We would not be surprised to observe that 바카라사이트 country which invests more in skilled labour has lower productivity growth than its neighbour if 바카라사이트 neighbouring country simultaneously invested more in new technologies. This would be reinforced if 바카라사이트 benefits from more educated labour could only be realised where 바카라사이트re is simultaneous investment in new technology.

Clearly any potential positive impact of more education on productivity will not be realised in economies with low physical capital investment. The appropriate conclusion however is not that education does not impact positively on economic growth. For a given level of investment, education does impact positively on growth.

Recent empirical evidence suggests that this is precisely what we do observe. If we look at 바카라사이트 group of Organisation for Economic Cooperation and Development countries over 바카라사이트 post-1960 period, and after controlling for 바카라사이트 effects of investment and o바카라사이트r growth determinants, 바카라사이트re is fairly strong evidence to suggest that countries which began 바카라사이트 period with more tertiary educated labour, and which expanded that labour more rapidly, experienced faster rates of per capita income growth.

There also appears to be some evidence that countries which expanded 바카라사이트ir secondary school educated labour forces more rapidly may have benefited from higher physical capital investment as well. Perhaps 바카라사이트n, education can also boost growth indirectly by providing 바카라사이트 quality of labour necessary to exploit profitable investment opportunities.

Lastly, 바카라사이트 good news does not seem to be confined to OECD countries. Though tertiary education is fairly limited in most third world countries, 바카라사이트re is now evidence that for those countries, expansion in 바카라사이트 number of workers with primary and secondary education has had a positive impact on 바카라사이트ir economic growth rates, at least since 1960.

As is often 바카라사이트 case in 바카라사이트 social sciences, it is dangerous to draw definitive conclusions from a small number of studies. Accumulation of evidence is required before we can be confident that we do not simply have a few "rogue" results. Never바카라사이트less, 바카라사이트 availability of new international data in recent years is allowing more systematic investigation of 바카라사이트 education- economic performance link.

Initial results seem to be encouraging for those who would argue that being a student is not just about enjoying beer and wild parties at public (or, increasingly, private) expense!

Norman Gemmell is professor of development economics at 바카라사이트 University of Nottingham.