Do we need education for economic growth?

In 1960, countries with an education level of 8.3 years of schooling were 5.5 times richer than those with 2.8 year of schooling. By contrast, countries that had increased their education from 2.8 years of schooling in 1960 to 8.3 years of schooling in 2010 were only 167% richer. Moreover, much of this increase cannot possibly be attributed to education, as workers in 2010 had the advantage of technologies that were 50 years more advanced than those in 1960. Clearly, something other than education is needed to generate prosperity.
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And there is more bad news for the “education, education, education” crowd: Most of the skills that a labor force possesses were acquired on the job. What a society knows how to do is known mainly in its firms, not in its schools. At most modern firms, fewer than 15% of the positions are open for entry-level workers, meaning that employers demand something that the education system cannot – and is not expected – to provide.

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Make no mistake: education presumably does raise productivity. But to say that education is your growth strategy means that you are giving up on everyone who has already gone through the school system – most people over 18, and almost all over 25. It is a strategy that ignores the potential that is in 100% of today’s labor force, 98% of next year’s, and a huge number of people who will be around for the next half-century. An education-only strategy is bound to make all of them regret having been born too soon.

This generation is too old for education to be its growth strategy. It needs a growth strategy that will make it more productive – and thus able to create the resources to invest more in the education of the next generation. Our generation owes it to theirs to have a growth strategy for ourselves. And that strategy will not be about us going back to school.

http://www.project-syndicate.org/commentary/education-economic-growth-by-ricardo-hausmann-2015-05

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