issue xi: 32-35: the value of education in a changing society

VOX - The STudenT JOurnal Of POliTicS, ecOnOmicS and PhilOSOPhy iSSue Xi - SPring 2010

32

it states that beyond the threshold level of fundamental functionings, re-sources should be devoted in ways that allow the higher achievements of some to benefit the lower achievement of others. While this framework does not provide a theory of educational equal-ity, it nevertheless helps in providing a possible answer to the debated ques-tion of what constitutes educational equality for children with disabilities and special educational needs.

i(notes available online)

BibliographyAnderson, E. (1999) What is the Point of Equality?, Ethics, 109.3, pp. 283–337.Brighouse, h. (2003) Educational Equality and Justice, in: r. curren (ed.) a companion to the philosophy of Education (oxford, Blackwell

Publishing), pp. 471–486.nussbaum, m. (2000) Women and human de-velopment: the capabilities approach (cam-bridge, cambridge university press).rawls, J. (2001) Justice as fairness: a restate-ment (cambridge, harvard university press).Sen, A. (1992) Inequality Reexamined (Oxford, clarendon press).Sen, A. (1999) Development as Freedom (Ox-ford, oxford university press).Terzi, L. (2007), ‘Capability and Educational Equality: the just distributionof resources to students with disabilities and special educational needs’, Journal of philoso-phy of Education, 41 (4) 757-774.terzi, l. (2008) Justice and Equality in Educa-tion: a capability perspective todisability and special Educational needs (lon-don and new york, continuum)._____________________________

Lorella Terzi is a professor at the School of Education, Roehampton University

thE Empirical study of thE Economics of Education has

become one of the most prolific re-search areas in economics. one reason is that the framework employed by economists to study education, hu-man capital theory, provides a simple but very powerful explanation of why and when individuals choose to accu-

mulate labour market skills. the basic mechanism that is proposed postulates that individuals forego present wages in low productivity occupations in or-der to obtain the skills that will allow them to enter high productivity, high wage occupations in the future. sec-ond, research into the economics of

thE VAluE of EducAtion in A chAnGinG SociEtY

By Associate Professor Ana Ferrer


33

education has also become popular because there is a relative abundance of quality data that allows us to test many of the predictions of the model. third, and perhaps most importantly, the policy implications of the model are of immense relevance. from the point of view of governments, invest-ments in the education of the popula-tion will affect economic productivity and growth. further, thanks to addi-tional theoretical insights that intro-duce financial diversity and the issue of access to education, economists have established a link between educa-tion and both inequality and poverty.i

concerns about growth and inequality have placed the study of the economics of education at the core of the policy agenda. in this article i will highlight the answers that this abundance of re-search can provide for two problems affecting modern economies. Whether viewed from the so-cial or private perspective, education is generally thought to provide net ben-efits. Whereas governments are gener-ally concerned with the influence of education on measures of economic performance or well being, such as social integration or innovative activ-ity, individuals are primarily concerned with the effect of education on wag-es and/or employment. Hence most studies focus on estimating the returns to education – the increment in wages that can be expected with additional education or training. Estimates of these returns motivate education relat-

ed policies, like school enrolment, sub-sidies to education and regulation of tuition fees, and public investment in training programmes for unemployed youth or displaced workers. hence, the central question in empirical mi-croeconomic studies on education is: how much is education worth? the conclusion from the myriad of stud-ies that try to answer this question is unanimous: Education substantially enhances the wages of the educated. however, these returns show such variability across different individual characteristics, such as gender, ethnic-ity, and occupation, that the question arises of what we are really measur-ing in these studies. What policy mak-ers need is some absolute measure of the value of education. somehow they need to know whether providing everybody with training or education will increase the wages of the educated individuals by the amount estimated by economists. unfortunately, econo-mists have trouble answering this question. Because empirical studies are based on comparison between those who get an education and those who do not, the estimates of the worth of education are likely to include other generally unobserved individual traits that influence wages. For instance, if those with better aptitude for learning are the ones who get an education, our estimates of the economic worth of education may be inflated, with much of the apparent effects coming not from education itself, but from that


34

higher learning ability. further, provid-ing access to education may not have an effect on inequality if the returns to education do not depend on educa-tion per se but on other characteristics that just happen to be associated with education, like personal connections. this problem, called selection bias, has made it difficult for economists to give the question on the worth of educa-tion an unequivocal answer.ii

how well we measure the re-turns to education becomes particu-larly relevant when we are concerned with the effects of education on in-equality, particularly with respect to its ability to alleviate problems brought about by rapidly changing technolo-gies and the shifting structure of the labour force. technological change – especially advances in information and computer technologies – and glo-balization of production have resulted in a growing demand for highly skilled workers that can adapt rapidly to these changes. in addition, western econo-mies are experiencing substantial de-mographic transformations. an aging cohort of baby-boomers leaving the labour force has also contributed to create a vacuum of experienced work-ers. partially as a result, immigration has increased to unprecedented levels in most developed countries. Both of the above outlined changes have placed access to educa-tion at the heart of much of today’s labour market inequalities. low skilled

workers face a high risk of long term unemployment and low wages, with few benefits and possibilities of im-provement. this is not the only group at risk. the pace of technological change is such that displaced workers, such as adult women who interrupted their careers for child rearing or adult men who lose their jobs, may also be left out of main stream jobs and con-fined to low end jobs unless they can update their education or skills. Even highly skilled immigrants are suscepti-ble to a similar fate if their credentials are not recognized. given this environ-ment, current public interest in the re-turns to education is focused on these two issues: What is the value of up-dating the skills of the existing labour force, particularly those that may lose their jobs because of changing tech-nologies and increased globalization? and is education enough to integrate an increasingly foreign population into the labour market and hence into our societies? the value of updating the skills of the current labour force varies depending on the type of training ac-quired. government-sponsored train-ing is mostly concerned with providing general skills that increase individual employability in a variety of workplac-es and focuses on workers at high risk of social exclusion (unemployed work-ers and disadvantaged workers with limited skills). privately-sponsored training, on the other hand, is usually


firm-specific, provided to those with already high levels of skills, and who may even be currently employed. in general, the returns to privately-spon-sored training finds positive effects on labour market outcomes such as wages or promotions. the magnitude of the returns varies depending on the type of training studied and the methodol-ogy employed. government sponsored training, however, has a mixed record, raising earnings of some groups (adult women and displaced workers) but having little or no impact on earnings of others (disadvantaged adult men and youths). Even when they are posi-tive, the impacts on earnings are mod-est and are usually not large enough to substantially reduce poverty rates. iii regarding the second ques-tion, the study of immigrant economic assimilation in immigrant recipient countries suggests that foreign educa-tion is not enough to ensure a smooth transition into the host country econo-my. Even countries that receive largely skilled immigrants by virtue of their selection system, like australia and canada, report that recent immigrants have trouble assimilating into the la-bour force in terms of earnings and employment. the main problem seems to be with the difficulty in recognizing and evaluating foreign skills. informal learning, such as experience acquired on the job, is hard to assess and, there-fore, it becomes highly discounted by local employers.iv Even formal learn-

ing encounters significant barriers in being recognized by local employers, particularly in health professions and engineering. overall, research on the returns to education and training agrees that, for the most part, public education and training is desirable for displaced work-ers and immigrants. however, public programmes should be made more ef-ficient than they have been in the past. crucial design features include care-ful targeting of the participants most likely to benefit from education, keep-ing programs small in scale, including a strong work experience component to establish links with employers, and having programmes that produce a certification that is recognized in the labour market. in addition, problems associated with low skills more gener-ally should be addressed much earlier in the life cycle. research shows us that education is strongly linked to productivity and individual well being. it seems, however, that if we want de-mographic and technological changes to increase individual well-being, we should promote educational policies that address the inequalities created by these changes and do not disregard the lessons learned from the study of the returns to education.

i (notes available online)_____________________________

Ana Ferrer is Associate Professor at the Department of Economics at the University of Calgary

35

VOX The STudenT JOurnalOf POliTicS, ecOnOmicS and PhilOSOPhy

voxjournal.co.uk

VOX Summer Issue 2010: ‘Control’

VOX, the Student Journal for Politics, economics and Philosophy is calling for articles to be submitted for the Summer issue 2010, with the broad theme “control”. articles should be between 1,000 and 1,250 words in length. if you would like to write on this theme, please e-mail [email protected] by 26 March 2010

you may wish to write on a topic from the list below:

• managing the market (trade, planned economy, managing inefficiency)• controlling poverty• To what extent are our lives dominated by technological rationality?• regulating corporate behaviour in the age of globalization• government power • lack of self-control (scepticism, religion, existentialism)• War as a means of resource control • ____________ (your own idea)

(undergraduates, graduates and academics Welcome)

Back issues are available at: www.voxjournal.co.uk

issue xi: 32-35: the value of education in a changing society

Documents