Public pain, student gain?;Briefing;Research focus

22nd May 1998 at 01:00
New evidence suggests that university tuition fees can be justified in terms of graduate salaries. David Budge reports

A new battery of international earnings and employment statistics provides qualified support for the Government's policy of forcing students to meet part of the cost of their higher education.

During the course of their working lifetime, men in the UK who leave school early can expect to be unemployed for more than three times as long as a man who has had tertiary education.

Statistical tables compiled by the Organisation for Economic Co-operation and Development show that the disparity in income between early school-leavers and university graduates in the UK is also striking. On average, men aged 30-44 who left school at 16 earn less than half the salary of their graduate contemporaries.

And the earnings gap is even greater for women of the same age. A UK woman graduate aged 30-44 earns nearly three times as much as someone who has had only a basic education.

The tables appear in an OECD document, Human Capital Investment - An International Comparison, which considers the returns on educational spending in the 26 member countries.

The report is cautiously worded because this is a notoriously difficult field of research. However, the authors comment: "In areas such as tertiary education for young people, where investments are primarily public but large private gains accrue, it is legitimate to ask whether cost-sharing should be adjusted. "In doing so, however, due account should be taken of aspects of existing private costs (such as forgone earnings) and public benefits (spin-off social gains) that are not always fully reported."

Such social gains may affect public health, crime statistics, the environment, parenting, political and community participation and social cohesion. Inevitably, such benefits cannot be easily quantified in dollars, pounds or francs. But the report's authors say that the search for increasingly sophisticated measures of human capital and their links with national investment must continue as knowledge and skills have virtually replaced machines as the most vital asset for making economies work.

"Public and private spending on formal education and training are on average about 6 per cent of GDP," the report says. "Companies allocate about 2 per cent of their pay bill to training their workers. However, as well as this readily-identifiable spending, considerable resources in terms of the time of families and individuals are devoted to the improvement of knowledge, skills and competence. So, the stakes are high: it is critical that this effort is well-directed."

The report suggests that the definition of human capital should be widened to include a broad range of skills and competences as well as technical know-how. "Pioneering efforts have recently tested adult skills on a basis that is internationally comparable," it says.

Three main conclusions are reached, in addition to the finding that spending on education and training yields as good a return as investment of business capital.

l The skills and competences of the adult population differ widely in OECD countries. Generally one-third to one-half of 25- to 64-year-olds are insufficiently literate to meet the demands of contemporary life and work.

* Post-school learning and training are skewed towards younger, economically active and better-educated people. Those who need training most - such as the unemployed - are least likely to get it.

* There are large, and often inexplicable, differences in funding for different types of education and training. "It is not clear why some countries spend over three times as much per student in tertiary education than in primary education, whereas others spend about the same," the report says. "The rationale for such patterns needs to be made clearer, and linked to the analysis of benefits."

"Human Capital Investment - an International Comparison", pound;15, from the Stationery Office Ltd, PO Box 276, London SW8 5DT.

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