Invest in education to beat recession, OECD urges

Posted at 09/08/2009 7:10 PM | Updated as of 09/09/2009 1:38 AM

PARIS - Investing in higher education will help states move out of recession and also bring lifelong financial rewards to people who choose to study for longer, the OECD said in a report Tuesday.

OECD TV report: Invest in education to beat recession, boost earnings (youtube.com/oecden)

"The economic crisis and the explosion of unemployment, combined with the benefits higher education brings, will encourage more young people to continue their studies in the coming years," OECD Secretary General Angel Gurria said.

States should encourage their young people to continue studying because "investments in human capital will contribute to (economic) recovery," Gurria told reporters as he presented the annual Education at a Glance report.

National budgets and the overall economy reap an advantage from higher numbers of graduates, said the report by the Paris-based Organisation for Economic Cooperation and Development.

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 52,000 dollars (36,000 euros).

That is nearly twice the average amount of money originally invested, said the OECD, a major policy forum for 30 of the world's richest nations.

For female students, the average net public return is lower because of their lower subsequent earnings.

Overall, the figures provide a powerful incentive to expand higher education in most countries through both public and private financing, the OECD said.

Individuals will profit handsomely too, said the report, which provides an array of indicators on the performance of education systems in the 30 OECD countries plus six non-OECD states including Russia, Brazil and Israel.

Going to university pays dividends in later life through higher salaries, better health and less vulnerability to unemployment, it said.

In most countries, the difference in pay levels between people who have degrees and people who do not is continuing to grow.

The report also 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.

A male student with a university degree can expect a gross income premium over his lifetime of more than 186,000 dollars (130,000 euros) on average across OECD countries, compared with someone with only secondary education.

"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 134,000 dollars," the report said.

The highest earnings advantages are in the United States, where a male graduate can expect to earn more than 367,000 dollars extra over his lifetime and a female graduate more than 229,000 dollars.

Italy came second for men, at just over 322,000 dollars, and Portugal for women, with an average advantage of nearly 220,000 dollars.

The 2009 edition of Education at a Glance also showed that the number of people with university degrees or other tertiary qualifications has risen on average in OECD countries by 4.5 percent each year between 1998 and 2006.

In Ireland, Poland, Portugal, Spain, and Turkey, the increase has been seven percent 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," it said.

Early childhood education is also growing fast, said the report. On average in OECD countries, enrolment has risen from 40 percent of three- to four-year-olds in 1998 to 71 percent in 2007.


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