How can education help tackle rising income inequality?

By Ji Eun Chung
Innovation and Measuring Progress Division, Directorate for Education

See instructions below for how to read the chart

The gap between the rich and poor has widened in OECD countries over the past 30 years. As the latest issue of the OECD’s new brief series Education Indicators in Focus describes, the average income of the richest 10% of people in OECD countries was about nine times greater than the income of the poorest 10% before the onset of the global economic crisis. This ratio was 5 to 1 in the 1980s.

What’s more, existing income inequality may also limit the income prospects of future generations in some countries. In countries with higher income inequality – such as Italy, the United Kingdom, and the United States – a child’s future earnings are likely to be similar to his or her father’s, suggesting that socio-economic background plays a large role in the development of children’s skills and abilities. Meanwhile, in countries with lower income inequality – like Denmark, Finland, and Norway – a child’s future income is not as strongly related to his or her family’s income status. In these countries, the development of children’s skills and abilities has a weaker link with socio-economic factors.

The implications for education policy are clear. Education policies focusing on equity in education may be a particularly useful way for countries to increase earnings mobility between generations and reduce income inequality over time. Countries can work towards this goal by giving equal opportunities to both disadvantaged and advantaged students to achieve strong academic outcomes – laying a pathway for them to continue on to higher levels of education and eventually secure good jobs.

Four top performers on the 2009 PISA reading assessment show the potential of this approach. Canada, Finland, Japan, and Korea all have education systems that put a strong focus on equity – and all have yielded promising results. In each of these countries, relatively few students performed at lower proficiency levels on the PISA reading assessment, and high proportions of students performed better than would be expected, given their socio-economic background.

Yet while each of these countries focuses on equity, they’ve pursued it in different ways. In Japan and Korea, for example, teachers and principals are often reassigned to different schools, fostering more equal distribution of the most capable teachers and school leaders. Finnish schools assign specially-trained teachers to support struggling students who are at risk of dropping out. The teaching profession is a highly selective occupation in Finland, with highly-skilled, well-trained teachers spread throughout the country. In Canada, equal or greater educational resources – such as supplementary classes – are provided to immigrant students, compared to non-immigrant students. This is believed to have boosted immigrant students’ performance.

Income inequality is a challenging issue that demands a wide range of solutions. In a world of growing inequality, focusing on equity in education may be an effective approach to tackle it over the long run.

For more information
On this topic, visit:
Education Indicators in Focus: www.oecd.org/education/indicators
Equity and Quality in Education - Supporting Disadvantaged Students and Schools
On the OECD’s education indicators, visit:
Education at a Glance 2011: OECD Indicators: www.oecd.org/edu/eag2011
Divided we stand: Why inequality keeps rising: www.oecd.org/els/social/inequality
On the OECD’s Indicators of Education Systems (INES) programme, visit:
INES Programme overview brochure

Chart source: Source: D'Addio (2012, forthcoming), “Social Mobility in OECD countries: Evidence and Policy Implications”; OECD (2008), Growing Unequal?, www.oecd.org/els/social/inequality/GU; OECD Income distribution database.


How to read the chart: This chart shows the relationship between earnings mobility between generations of a family, and the prevalence of income inequality in different countries. Overall, countries with higher levels of income inequality tend to have lower earnings mobility between generations, while countries with lower levels of income inequality tend to have higher earnings mobility.

Bridging the skills gap

by Kathrin Hoeckel
Analyst, Skills Beyond Schools Division, Directorate for Education

If you were to ask someone which countries tend to bear the brunt of a shortage of skills in this era of globalised trade, you couldn't fault them for thinking of developing countries.

While this is certainly true, the problem is by no means limited to poorer countries. Indeed, even in countries at the forefront of the developed world and consistently at the top of the PISA rankings, skills shortages can plague the economy.

Two such countries are Australia and Canada.

The Canadian Council on Learning says there is a clear “gap between the demand for workers with strong literacy and numeracy skills and the supply of Canadians who possess them.” They point out that the growth in the information communication technology industries, coupled with the reduced demand for unskilled workers due to foreign outsourcing, has only served to intensify the need for skilled workers. The question is why there is such a gap when Canadian teenagers do so well on tests such as PISA's. The answer, they posit, lies in the failure of adults to keep up with the “demands of the emerging knowledge society and information economy”. In other words, lifelong learning is as essential to a strong economy as successful schools (as can be seen in the OECD’s Education at a Glance statistics on adult participation in education and learning, job-related training is comparatively low in Canada).

Australian companies are also hard hit by the skills gap. The Australian Institute of Management recently released a study that found 82% of organisations admit to a skills shortage in their workplace, with middle management lacking particularly in leadership and technical skills.

Brian Schmidt, Australia's 2011 Nobel Prize winner for Physics, feels that a key problem is the lack of skilled teachers, particularly in maths and science. He points to the OECD’s Education at a Glance statistics on teacher salaries, which indicates that there tends to be a correlation between well paid teachers and students that excel.

The country's mining industry is suffering, in Mr Schmidt's opinion, from a direct consequence of this. He says that the industry's lack of highly trained engineers threatens the resource boom currently under way in Australia. He relates how the chair of the mining company BHP Billiton told him the biggest problem his company faces is finding highly skilled employees competent in mathematics.

The consequences could be dire for Australia. BHP Billiton predicts that the mining industry alone will require an additional 150 000 workers over the next five years.

Furthermore, Chris Evans, Australia's Minister for Tertiary Education and Skills, estimates that Australia will need over 2 million additional workers by 2015 with higher vocational education and training (VET) qualifications. To meet this challenge, Australia drew up ambitious plans just last year to improve its existing VET system (which, as Learning for Jobs: OECD Reviews of Vocational Education and Training shows, is already quite strong) by investing up to €15 billion by 2020.

In Latin America, an altogether different region of the world, the economic pain from the skills gap – evocatively known in Spanish as “la brecha”, or the breach – is also acutely felt. According to the Inter-American Development Bank (IDB), youth unemployment has increased across Latin America more than any other region in the world, and this can be directly attributed to young people lacking the skills required by the labour market. Not surprising when time and time again the research shows that poor skills go hand in hand with economic hardship.

In a study released earlier this month, the IDB stated that the youth in Latin America have a long way to go in developing the “interpersonal skills the market requires, such as responsibility, communication and creativity”. Its research shows that the majority of young workers across the region have informal jobs and lack social benefits.

One thing that is common to all these countries is that children from disadvantaged socio-economic backgrounds are disadvantaged when it comes to foundation skills in reading, mathematics and science (see OECD’s Education at a Glance statistics on equality in educational outcomes and opportunities). However, countries with the very best scores in PISA tend to have schools that are more inclusive. In other words, students can score well regardless of their socio-economic background. This in turn benefits the economy and society as a whole.

For if knowledge and skills are the global currency of the 21st century, countries will do well to stock up on their reserves. They can do so by encouraging people to learn, enticing skilled people to enter their countries, encouraging people to use and build their skills at work, retaining skilled people, matching skills to demand, and finally increasing the demand for high-level skills. That goes for economic heavyweights and flyweights alike.

Interested in learning more? Watch out for the OECD Skills Strategy, coming in May 2012, where we will lay the land for bridging the skills gap, turning brain drain into brain exchange, coping with ageing societies and declining skills pools and more.

Links:
OECD Skills Strategy
Education at a Glance 2011: OECD Indicators
Programme for International Student Assessment (PISA)

Photo credit: © olly / Shutterstock

Women’s outcomes in education and employment: strong gains, but more to do

by Éric Charbonnier and Corinne Heckmann
Innovation and Measuring Progress Division, Directorate for Education

There’s no denying it: when it comes to education and employment, women are on a roll, all over the world.  As described in the latest issue of the OECD’s new brief series Education Indicators in Focus, the achievement gap between boys and girls has narrowed so much at lower levels of education that the focus of concern is now on the underachievement of boys.  On the 2009 PISA reading assessment, for example, 15-year-old girls outperformed boys in every OECD country, on average by 39 points – the equivalent of one year of school.

Young women are also making strong progress in higher education in OECD countries.  In 2000, 51% percent of women could be expected to enter a university-level programme at some point in their lives; today, the number is 66%.  In fact, the proportion of women who hold a university-level qualification now equals or exceeds that of men in 29 of the 32 OECD countries for which data are comparable. This figure is below 50% only in China, Japan, Korea and Turkey.

At the same time, still more can be done to improve outcomes for girls and young women in the classroom.  In mathematics, for example, 15-year-old boys tend to perform slightly better than girls in most countries, while science performance is more variable.  And in higher education, women remain under-represented at the most advanced levels.  Across all OECD countries, less than half of advanced research qualifications such as doctorates were awarded to women in 2009.  In Japan and Korea, the figure is only around 30%.  This pattern holds in all countries except Brazil, Finland, Iceland, New Zealand, Poland, Portugal and the United States.

In addition, some fields of study are still branded as “masculine” or “feminine”. In 2009, more than 70% of higher education students in the field of education were women, and an average of 75% of the degrees in the fields of health and welfare also went to women. By contrast, in most countries, fewer than 30% of all graduates in the fields of engineering, manufacturing and construction were women.

Nonetheless, women’s strides in education have led to improved labour market outcomes for women overall. For instance, the gender gap in employment narrowed from 25 percentage points in 2000 to 21 percentage points in 2009 among those without an upper secondary qualification, and from 19 percentage points in 2000 to 15 percentage points in 2009 among those with an upper secondary qualification. And it’s narrower still among those with a higher education qualification, shrinking from 11 percentage points in 2000 to 9 percentage points in 2009.

Increasingly, OECD countries are doing more to address gender gaps – both in education and employment.  For example, in the Czech Republic, Germany and the Slovak Republic, the proportion of women graduating with science degrees grew by more than 10 percentage points between 2000 and 2009.  As a result, these countries are now closer to the OECD average of 40% -- a figure that has remained stable over the past decade. In 2000, the European Union announced a goal to increase the number of university graduates in mathematics, science and technology by at least 15% by 2010, and to reduce the gender imbalance in these subjects. So far, however, progress toward this goal has been marginal.

On the employment side, the Nordic countries, Germany and Portugal have instituted policies allowing fathers to receive parental leave and income support so their spouses can remain in the workforce.  In Iceland, Norway and Spain, some firms are required to have at least 40% of their boardroom seats assigned to women. Meanwhile, other companies, such as Deutsche Telekom, have introduced voluntary quotas for women in management and family-friendly practices such as flex-times and tele-working.

The bottom line is clear: while girls and women have made strong gains, it’s time to finish the job.  To promote gender equality even further, policymakers should be encouraged to pursue policies to increase mathematics and science performance among girls – as well as reading achievement among boys.  Meanwhile, initiatives to break down gender stereotypes in fields of study and progressive corporate policies can do more to increase women’s employment opportunities.

For more information
On this topic, visit:
Education Indicators in Focus
OECD Gender Initiative
www.oecd.org/gender/equality
On the OECD’s education indicators, visit:
Education at a Glance 2011: OECD Indicators
www.oecd.org/edu/eag2011
On the OECD’s Indicators of Education Systems (INES) programme, visit:
INES Programme overview brochure
Chart source: OECD Education Database

Increasing higher education access: one goal, many approaches

by J.D. LaRock
Senior Analyst, Innovation and Measuring Progress Division, Directorate for Education

Few would dispute that having a higher education is more important than ever to help people build positive economic futures and strengthen the knowledge economies of countries. Yet as the second issue of the OECD’s new brief series Education Indicators in Focus explains, OECD countries have adopted dramatically different strategies for increasing higher education access – both in terms of how higher education is financed, and in the level of financial support they provide to individuals seeking a degree.

For example, in countries with more progressive tax structures, such as Denmark, Finland, Iceland, Norway and Sweden, students pay low or no tuition fees and have access to generous public subsidies for higher education. Tuition fees are much higher in Australia, Canada, New Zealand, the Netherlands and the United States, but students in these countries also have access to significant financial support.

Before recent reforms in Japan and in Korea, students paid comparatively high tuition fees, but had relatively low access to public subsidies. Meanwhile, in Austria, Belgium, the Czech Republic, France, Ireland, Italy, Portugal, Switzerland, Spain and Mexico, students pay little or nothing for higher education, but have limited access to financial aid.

At a time when most OECD countries are experiencing surges in higher education enrolments – but also face significant budget constraints – which model stands a better chance of promoting higher education access and positive outcomes for students in the most equitable way? As it turns out, there’s something to be learned from several of them.

As detailed in the OECD’s thematic review of higher education, charging a moderate level of tuition fees – while simultaneously giving students opportunities to benefit from comprehensive financial aid systems – is an effective way for countries to increase access to higher education, stretch limited public funds, and promote equity by acknowledging the significant private returns that students receive from higher education.

In particular, access to robust financial aid seems to be the key.  For example, countries with especially well-developed student support systems – like Australia, New Zealand, the United Kingdom and the United States – all have above-average university entry rates, even though they also have comparatively high tuition fees.

At the same time, the type of financial aid countries offer is also critical. The OECD’s review suggests that financial aid systems that couple means-tested grants and loans that have income-contingent repayments not only promote access and equity at the front end of higher education, but also lead to better outcomes for students at the back end. Australia and New Zealand have used this approach to mitigate the impact of high tuition fees, encourage disadvantaged students to enter higher education, and reduce the risks of high student loan indebtedness. Other OECD countries that use this strategy include Chile, the Netherlands, the United Kingdom, and the United States.

Increasingly, countries are adjusting their higher education financing and support systems in other ways as well. For example, more countries have raised tuition fees for international students in recent years, in part to shore up the finances of their higher education systems. At least 14 OECD member and partner countries differentiate tuition fees among fields of study to account for the higher cost of operating some academic programmes.  Some countries like Australia have even attempted to link higher education charges to labour-market opportunities by lowering tuition fees for fields with skills shortages.

In an era of booming enrolments and tightening belts, it won’t be surprising if still more changes are on the horizon.

For more information
On this topic, visit:
Education Indicators in Focus
On the OECD’s education indicators, visit:
Education at a Glance 2011: OECD Indicators  www.oecd.org/edu/eag2011
On the OECD’s Indicators of Education Systems (INES) programme, visit:
INES Programme overview brochure

Related blog post:
Higher education: an insurance policy against global downturns

Chart excludes OECD countries for which specific data on public subsidies is not available.
Source: Education at a Glance 2011: OECD Indicators, Indicator B5 (www.oecd.org/edu/eag2011).

Higher education: an insurance policy against global downturns

by J.D. LaRock
Senior Analyst, Innovation and Measuring Progress Division, Directorate for Education

During the first two years of the economic crisis, unemployment
was higher among adults with less education, on average across the OECD zone.

With all the economic turmoil of the past several years, have you ever wished you could buy an insurance policy to protect against the effects of a global recession?  Well, such a insurance policy already exists – and it’s called higher education.  During the first two years of the global economic crisis, in country after country, people with a tertiary (higher) education were much less likely to be unemployed, much more likely to be participating in the labour force, and more likely to have higher earnings, compared to their less-educated counterparts.

These and other findings are discussed in the first issue of the OECD’s new education brief series, Education Indicators in Focus.

As the crisis ramped up in 2008 and continued in 2009, unemployment rates increased across the board in OECD countries. However, the impact was much greater for adults without an upper secondary education. Among this group, unemployment rates rose from an already high 8.7% to 11.5%, and jumped five percentage points or more in Estonia, Ireland, Spain and the United States.  Adults with an upper secondary or equivalent level of education fared somewhat better: among this group, unemployment rates rose from 4.9% to 6.8% between 2008 and 2009 across the OECD zone.  However, in Estonia, Ireland, Spain and Turkey, jobless rates reached 10% or more for this group of people – a mark generally regarded as troublingly high territory for unemployment.

By contrast, people with a tertiary education were the best protected against unemployment during the thick of the global recession. Overall, unemployment rates in OECD countries ticked up just 1.1 percentage points for this group between 2008 and 2009, from 3.3% to 4.4%.  Moreover, 2009 unemployment rates remained at 5% or less for tertiary-educated people in 24 out of 34 OECD countries, and surpassed 8% in only two – Spain and Turkey.

Employment figures tell a similar story: during the crisis year of 2009, people with higher education not only had less trouble finding a job, but also had an easier time keeping the job they had.  Across all OECD countries, 83.6% of adults with a tertiary education were employed in 2009, compared to 74.2% of adults with an upper secondary or equivalent education, and just 56.0% of adults without an upper secondary education.  While a number of factors contribute to the level of adults’ participation in the labour force, higher employment rates for people with more education point to a better match between the skills these individuals possess and the skills the labour market demands, even during periods of economic crisis.

What’s more, the sizeable earnings premium that university-educated people typically enjoy in the labour market held strong during the crisis years of 2008 and 2009.  In 2008, among 14 OECD countries with comparable data, the typical employee with higher education earned 56% more than the typical employee with an upper secondary or equivalent education.  Even in the face of the economic crisis, this premium increased slightly to 57% in 2009. By contrast, the typical employee without an upper secondary education earned 23% less than a corresponding worker with an upper secondary education in 2008 – and this earnings penalty remained the same in 2009.

Having a higher education isn’t fail-safe protection from the consequences of a global economic downturn.  But like any good insurance policy, it can help people recover when bad things happen to them.  And with the economic outlook for 2012 looking as uncertain as it does, that’s no small comfort.

For more information
Education Indicators in Focus
Education at a Glance 2011: OECD Indicators www.oecd.org/edu/eag2011
OECD’s Indicators of Education Systems (INES) programme (Brochure PDF 2.3 KB)

Chart source: Education at a Glance 2011: OECD Indicators, Indicator A7.

Ringing in a new (school) year

Early September marks the beginning of a new school year for children in the northern hemisphere (our friends in the southern hemisphere have been back to school for months now). It also marks the beginning for OECD educationtoday's new blog home here at oecdeducationtoday.blogspot.com.

Many of you know us at www.oecd.org/edu/educationtoday where for years now we have brought you the latest and greatest developments in education - in areas such as student performance, early childhood learning, online learning and more. Today, we are moving our blog to a new home, where we hope many more of you will find us, join us and tell us what you think.

We will continue to blog about hot topics in education around the globe and at OECD, bringing you an insider look at new findings in international student performance, skills, early childhood education, education innovation and more. Guest bloggers from within the OECD (including experts in the field) and from around the world (education ministers and education movers and shakers) will share their thoughts, listen to yours and respond to your questions and comments.

Next week look out for a post by Andreas Schleicher, all about OECD's Education at a Glance, our annual report on how countries around the world are measuring up inside and outside the classroom. You won't want to miss it!

There's nothing like having access to breaking and relevant thinking in your favourite field. Ours is education. You too? Sign up to receive our blogposts by email, join this site with Google Friend Connect, tweet out blogs you like (or those you don't) and keep coming back.

Now back to the pencil sharpeners, books and laptops ... a busy year lies ahead!

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