Better information on university quality may
reduce underemployment and overeducation in developing countries
As the number of secondary school graduates
rises, many developing countries expand the supply of public and private
universities or face pressure to do so. However, several factors point to
the need for caution, including weak job markets, low-quality university
programs, and job–education mismatches. More university graduates in this
context could exacerbate unemployment, underemployment, and overeducation of
professionals. Whether governments should regulate the quantity or quality
of university programs, however, depends on the specific combination of
factors in each country.
External school leaving exams raise student
achievement and improve how grades are understood in the labor market
Reaching the policy goal of improving student
achievement by adding resources to the school system has often proven
elusive. By contrast, ample evidence indicates that central exit exams
constitute an important feature of a school system’s institutional
framework, which can hold students, teachers, schools, and administrators
accountable for student outcomes. While critics point to issues such as
teaching test-only skills, which may leave students ill-prepared for the
real world, the evidence does not bear this out. Overall, central exams are
related to better student achievement, favorable labor market outcomes, and
higher economic growth.
Education benefits individuals, but the societal benefits are
likely even greater
Formal schooling increases earnings and provides other
individual benefits. However, societal benefits of education may exceed individual benefits.
Research finds that higher average education levels in an area are correlated with higher
earnings, even for local residents with minimal education. Science, technology, engineering,
and mathematics (STEM) graduates appear to generate especially strong external effects, due to
their role in stimulating innovation and economic growth. Several strategies to test for
causality find human capital externalities do exist.
While a four-year college degree is financially
beneficial for most people, it is not necessarily the best option for
A postsecondary degree is often held up as the
one sure path to financial success. But is that true regardless of
institutional quality, discipline studied, or individual characteristics? Is
a college degree always worth the cost? Students deciding whether to invest
in college and what field to study may be making the most important
financial decision of their lives. The return to education varies greatly by
institutional quality, discipline, and individual characteristics.
Estimating the returns for as many options as possible, and making that
information as transparent as possible, are paramount in helping prospective
students make the best decision.
Preschool improves child outcomes, especially
for disadvantaged children
Children from disadvantaged families have lower
levels of school readiness when they enter school than do children from more
advantaged families. Many countries have tried to reduce this inequality
through publicly provided preschool. Evidence on the potential of these
programs to reduce inequality in child development is now quite strong.
Long-term studies of large publicly funded programs in Europe and Latin
America, and newer studies on state and local prekindergarten programs
implemented more recently in the US, find that the programs do improve
outcomes for young children, particularly for those from disadvantaged
Basic skills in literacy and numeracy are
essential for success in the labor market
Even in OECD countries, where an increasing
proportion of the workforce has a university degree, the value of basic
skills in literacy and numeracy remains high. Indeed, in some countries the
return for such skills, in the form of higher wages, is sufficiently large
to suggest that they are in high demand and that there is a relative
scarcity. Policymakers need robust evidence in order to devise interventions
that genuinely improve basic skills, not just of new school leavers entering
the market, but also of the existing workforce. This would lead to
significant improvements in the population that achieves a minimum level of
literacy and numeracy.
Shortening secondary school duration may
increase the skilled workforce in aging societies
The main goal of secondary school education in
developed countries is to prepare students for higher education and the
labor market. That demands high investments in study duration and
specialized fields to meet rising skill requirements. However, these demands
for more education are in opposition to calls for early entry to the labor
market, to lengthen working lives to meet the rising costs associated with
an aging population and to enable the intergenerational transfer of skills.
One way to lengthen working lives is to shorten the duration of secondary
school, an option recently implemented in Canada and Germany. The empirical
evidence shows mixed effects.
Student sorting into classes complicates policies that utilize peer effects to optimize educational outcomes
The role of social interactions in modifying individual behavior is central to many fields of social science. In education, one essential aspect is that “good” peers can potentially improve students’ academic achievement, career choices, or labor market outcomes later in life. Indeed, evidence suggests that good peers are important in raising student attainment, both in compulsory schooling and university. Interventions that change the ability group composition in ways that improve student educational outcomes without exacerbating inequality therefore offer a promising basis for education policies.