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In recent years

May 2, 2019 0 Comment

In recent years, skills development has become a priority among developed and developing countries alike. Having a skilled workforce has been recognized as paramount to boosting competitiveness in an increasingly global and interdependent economic environment, fostering innovation and business creation and increasing productivity. Since individuals with the right skills and knowledge are more likely to find employment, skills development can also have positive effects in reducing unemployment, raising incomes, and improving standards of living.This is consistent with the writer’s ideological order. He writes this paper trying to deal with different issues concerning how to measure educational attainment across countries and over time, the role of male versus female schooling and the educational inequality and mismatch. First of all let’s see the role of education: education is supposed to bring higher productivity and earnings, better health, nutrition and personal development and of course higher output and national competitiveness. For the macroeconomic aspect, education improves labor productivity, facilitate technological innovation and adoption and contribute to economic growth.
Many authors have examined the relationship between education and the labor market. Especially Psacharopoulos(1994); Psacharopoulos and Patrinos(2004) found that on average, an additional year of schooling results in about 10% of higher wage. Some others show that rates of return to schooling are higher for primary education and they can vary across countries and over time. Skill-biased technological progress increases skill premium and demand for educated workers (Katz and Murphy, 1992). Higher endowment of skilled workers can induce the development of skill-complementary technologies (Acemoglu, 2002). Now, let’s have a look at the evolution of education over two centuries. Lee and Lee (2016) construct an educational attainment disaggregated by education level and gender for 111 countries from 1870 to 2010 at five intervals. For the estimation methodology, they calculate educational attainment distribution at 4 broad categories. Missing observations are estimated observations by forward/backward extrapolation or weighted average and estimate average years of schooling by population group, and by education group. The graph showing the evolution of educational attainment for developing and advanced countries from 1870 to 2010 shows a similar trend for both. The only difference is reflected in the number of years spent in school. In developing countries, the number of years spent in school has increased from some months in 1870 to an average of 8 years in 2010 while this number is from 2 to 11 years in advanced country. This shows how education is a priority in those countries which is justified by their current level of development. However we have an upward trend in almost all regions in the world.
During recent years, educational inequality has declined continuously in all regions. Even the regions with greater inequality, such as South Asia and Sub-Saharan Africa, have experienced a substantial reduction in educational inequality though they still have a long way to go compared to advanced economies and the ones in Eastern Europe and Central Asia. The Education Gini which is a new indicator for the distribution of human capital and welfare, facilitating comparison of education inequality across countries and over time for the same kinds of countries shows that the education inequality is still huge in Sub-Saharan Africa and South Asia though declining. Advanced countries naturally exhibit smallest education Ginis. The literature also shows that for the Korean sample that 29% of Korean full-time employees are overeducated and 14% are undereducated and returns to an overeducated year vary across field of study at the tertiary level. Majors with relatively high returns are health and welfare, engineering, social sciences, business and law.
For the empirical analysis of educational inequality, the author regressed education Gini on a bunch of explanatory variables such as Income Gini, educational attainment or one-period lagged Education Gini. A group of environmental and policy variables (? X?_it) including trade openness, inflation, fiscal policy (government consumption and public education spending), democracy, and technological progress has also been added. For the data, a panel set of cross-country data for 95 economies over 7 five-year periods from 1980 to 2014 has been used. They have used one-period lagged values for per-capita income, income inequality and educational variables and averaged values over the previous five years for policy variables. The results show that the estimates for per capita GDP are significant and positive which means an increase in the GDP per capita leads to an increase in the Education Gini. The estimate for Income Gini is positive but non-significant. Also, educational attainment and Education have an inverse relation, which means the more people are educated, the less is the education inequality, same as education spending which is significant and negative.
The author’s methodology and results are quite standard. The data collected and used expands on a very long period and might reflect the general situation of different inputs. The only thing that is surprising is the fact that a growing economy will worsen the Education inequality. This is something I was not expecting. On review of several studies of cross-country growth, Easterly and Levine (2000) concluded that TFP (factors other than physical and human capital) explain bulk of the differences in economic growth and recommended shift in focus from capital accumulation to policies that promote TFP growth. Higher education has been seen principally as a form of investment that develops human capital (Schultz 1972) for many years, with new understanding of the decisive role of TFP strongly influenced by higher education has brought higher education to the center stage in economic growth of nations. So this result could be seen again and discussed further to identify the mechanism for such a result.
There has been remarkable growth in average educational attainment as well as narrowing of the gap in average educational attainment between nations. There is an ongoing debate on the role of education on the future prospects of the country. Should the country promote specific fields, and if yes which ones? Two schools of thought have been proffered. One argues that there is not enough information to make a choice that will withstand the uncertainty in the markets. The appropriate strategy, according to this view, is to address market failures in the education, labor, and allied markets. The other view, of course, holds that educational planning is required to minimize wastage from increasing unemployment of college graduates. The floor is open for debate.