Wages rise, but the pay gap won't close

25th April 2014 at 01:00
Access to secondary education and beyond is vital, report says

Worldwide improvements in access to education have led to higher average wages, but have failed to close the gap between the highest and lowest paid, new international analysis has found.

Inequality in education in developing countries has more than halved since the 1960s, with hundreds of millions more people learning to read and write, but the wage gap in many parts of the world remains almost unchanged, the research says.

The report also reveals a growing pay gap in industrialised nations. In 2000, people with secondary education or higher could expect to earn, on average, 85 per cent more than those who had only primary or lower secondary education. By 2011, that figure had risen to 120 per cent.

Rapid changes in technology meant that the best earners had highly specialised, highly paid skills, but very few people had access to the expensive courses required to learn these skills, academics suggested.

The researchers, who looked at data from 146 countries over six decades, said the findings showed that ongoing efforts to get people into basic primary education were highly laudable and resulted in better standards of living. But it was secondary, university and postgraduate education that had the biggest impact on earnings.

Co-author Rafael Domenech, a professor of economics at the University of Valencia, presented the report to the UK Royal Economic Society's annual conference this month. He said: "To ensure falling inequality of income, you need to ensure that people do not just go from being illiterate to primary school, but that they can go on to secondary or even tertiary education.

"We need to ensure that people are able to continue in formal education if we want the wage gap to decrease," he added. "[The goal for universal primary education] was a very good goal in the past, but we need now to move forward."

The working paper was presented in the same week that Ban Ki-moon, secretary general of the United Nations, launched an Emergency Coalition for Global Education Action. The group of campaigners, experts and celebrities will make extra efforts to achieve the development goal of getting all children into school by 2015. Currently, 57 million children worldwide still do not attend school. Former British prime minister Gordon Brown, now United Nations special envoy on global education, said that if progress towards the 2015 goal continued at its current rate it would take until 2086 to achieve.

Conor Ryan, director of research at social mobility charity the Sutton Trust, which runs a number of initiatives to encourage pupils from poorer backgrounds to go on to high-performing universities, said the research confirmed that improving access to higher and postgraduate education was vital.

A recent study published by the charity shows that UK workers with a master's degree earn pound;200,000 more than those with a bachelor's degree over a lifetime. In the US, the premium is shown to be twice as high, at almost pound;400,000.

But people from low- and middle-income backgrounds are in danger of being "priced out" of the market in postgraduate study, the report says.

Mr Ryan added: "It is clear that having a higher education is important in today's labour market to a greater extent than it was in the past. Our own research has shown that having a postgraduate qualification gives a significant extra premium. But there are obviously differences between courses and the access gap needs to be narrowed at the best universities."

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