OECD: Invest in education to beat recession, boost earnings

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Growing advantages for the better educated and likely continuing high levels of unemployment as economies move out of recession will provide more and more young people with strong incentives to stay on in education. Governments need to take account of this in planning education policies, according to the latest edition of the OECD‘s annual Education at a Glance .
As we emerge from the global economic crisis, demand for university education will be higher than ever,” OECD Secretary-General Angel Gurría said. “To the extent that institutions are able to respond, investments in human capital will contribute to recovery.”

Going to university pays dividends in later life through higher salaries, better health and less vulnerability to unemployment, OECD analysis shows. In most countries, the difference in pay levels between people who have degrees and people who don’t is continuing to grow.

The 2009 edition of Education at a Glance calculates the returns on investment in education by balancing the costs of education and of foregone earnings against prospects for increased future earnings as a result of higher educational attainment. (See Table A8.2 )

According to these calculations:

A male student who completes a university degree can look forward to a gross earnings premium over his lifetime of more than USD 186 000 on average across OECD countries, compared with someone who only completes secondary school.
For a woman the figure is lower, reflecting the disparity in most countries between male and female earnings, but it still averages out at just over USD 134,000.
The highest earnings advantages are in the U.S., where a male graduate can expect to earn more than USD 367,000 extra over his lifetime and a female graduate more than USD 229,000.
Italy comes second for men, with an average lifetime earnings advantage of just over USD 322,000, and Portugal for women, with an average advantage of nearly USD 220,000.

And the benefits don’t stop there.

Government budgets and the overall economy also reap an advantage from higher numbers of graduates, the OECD figures show.

The average net public return across OECD countries from providing a male student with a university education, after factoring in all the direct and indirect costs, is almost USD 52,000, nearly twice the average amount of money originally invested. (See Table A8.4 )

For female students, the average net public return is lower because of their lower subsequent earnings. But overall the figures provide a powerful incentive to expand higher education in most countries through both public and private financing.

Education at a Glance provides a rich, comparable and up-to-date array of indicators on the performance of education systems. The indicators look at who participates in education, what is spent on it, how education systems operate and what results are achieved.

Among other points, the 2009 edition of Education at a Glance reveals that:

The number of people with university degrees or other tertiary qualifications has risen on average in OECD countries by 4.5% each year between 1998 and 2006. In Ireland, Poland, Portugal, Spain, and Turkey, the increase has been 7% per year or more.
In 2007, one in three people in OECD countries aged between 25 and 34 had a tertiary level qualification. In Canada, Japan and Korea, the ratio was one in two.
In most countries, the number of people who leave school at the minimum leaving age is falling, but in Germany, Japan, Mexico, Poland, Turkey and the United States their numbers continue to rise.
Early childhood education is growing fast, and nowhere more than in Sweden. On average in OECD countries, enrolments have risen from 40% of 3-4 year-olds in 1998 to 71% in 2007; and in Turkey, Mexico, Korea, Poland, Sweden, Switzerland and Germany enrolment in early childhood education more than doubled.
Young people who leave school at the minimum leaving age without a job are likely to spend a long time out of work. In most countries over half of low-qualified unemployed 25-34 year-olds are long-term unemployed.
People who complete a high-school education tend to enjoy better health than those who quit at the minimum leaving age. And people with university degrees are more interested in politics and more trusting of other people.