Strengths and weaknesses of national systems of human capital development in europe
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Strengths and weaknesses of national systems of human capital development in europe

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Speech on European human capital development systems for the National Bank of Belgium - 18 June 2014

Speech on European human capital development systems for the National Bank of Belgium - 18 June 2014

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  • Young Koreans, for example, are outperformed only by their Japanese counterparts, while Korea’s 55 to 64 year-olds are among the three lowest-performing groups of this age across all participating countries. Every decade, Korea has been the equivalent of two years in quality, wihtout raising quantity. <br /> <br /> The results from Finland tell a similar story. <br />   <br /> But progress has been uneven. Young Brits and Americans are entering a much more demanding job market with similar literacy and numeracy skills as their compatriots who are retiring. The talent pool in these countries could shrink significantly over the next decades unless urgent action is taken both to improve schooling and to provide adults with better opportunities to develop and maintain their skills

Strengths and weaknesses of national systems of human capital development in europe Presentation Transcript

  • 1. STRENGTHS AND WEAKNESSES OF NATIONAL SYSTEMS OF HUMAN CAPITAL DEVELOPMENT IN EUROPE Dr. Dirk Van Damme Head, Innovation and Measuring Progress Division, OECD/EDU
  • 2. • Introduction: Conceptual and methodological issues • Changing economies, changing skills demands • Higher education, productivity and growth • Education, skills and employment • Skills distribution, growth and social inequality • National skill profiles • A few conclusions Outline 2
  • 3. CONCEPTIONAL AND METHODOLOGICAL ISSUES 3
  • 4. • Human capital: a major input into the economy – Human capital, productivity and innovation – Human capital growth as engine for economic growth • But: – Is more of it always better? – How to explain major differences in national human capital systems – More interest in the distribution of human capital and links with growth and inequality Human capital 4
  • 5. • From formal educational measures – Years of formal education – Educational qualifications (according to ISCED) • To measures of learning outcomes – Literacy and numeracy skills as foundation skills – PISA: among 15y olds (end of compulsory education) – PIAAC: across the 16-65y old population Measurement of human capital 5
  • 6. Educational attainment: a very crude proxy of actual skills Literacy scores by educational attainment 6
  • 7. CHANGING ECONOMIES, CHANGING SKILLS DEMANDS 7
  • 8. • Globalisation: massive relocation of skills in the ‘global value-chain’ • Skills-biased technological change and “The Race between Technology and Education” (Goldin & Katz) • Consequences: outsourcing and automation of specific segments of skills-based tasks/jobs – Disappearance of low-skilled jobs or hollowing out of the middle-skilled jobs? – Increasing risks for high-skilled jobs Impact of economic transformation on skills demand 8
  • 9. 9
  • 10. 10
  • 11. 11 Evolution of employment in occupational groups defined by level of skills proficiency
  • 12. 12 Changing skills demand
  • 13. 30 20 10 0 10 20 30 40 50 60 Austria Italy CzechRepublic SlovakRepublic Japan Germany England/N.Ireland(UK) Australia Poland Average Ireland UnitedStates Netherlands Spain Sweden Estonia Norway Denmark Korea Cyprus¹² Canada Finland Flanders(Belgium) Primary education or less Tertiary education or more Percentage workers in high-skilled and unskilled jobs 13
  • 14. HIGHER EDUCATION AND ECONOMIC GROWTH 14
  • 15. Growth in university-level qualifications (2010) Estimates of the percentage of the 25-34 year-old and 55-64 year-old population that has attained tertiary education 0 10 20 30 40 50 60 70 Korea Japan Canada Ireland Norway NewZealand UnitedKingdom Australia Luxembourg Israel Belgium France UnitedStates Sweden Netherlands Switzerland Finland Spain Chile Estonia OECDaverage Denmark Poland Iceland Slovenia Greece Germany Hungary Portugal SlovakRepublic CzechRepublic Mexico Austria Italy Turkey Brazil 25-34 year-olds 55-64 year-olds %
  • 16. Annual growth rate in tertiary educational attainment rate (1998-2008) -1 0 1 2 3 4 5 6 7 8 Ireland Turkey Spain Poland Portugal Luxembourg Korea Iceland Italy SlovakRepublic NewZealand Australia Switzerland OECDaverage CzechRepublic Hungary Greece Mexico Canada UnitedKingdom France Austria Denmark Japan Netherlands Belgium UnitedStates Finland Overall population growth Attainment rate growth%
  • 17. • Across countries, a higher tertiary education attainment rate is positively associated with higher labour productivity • Across countries, both growth rates are also positively correlated • Over time, increases in tertiary education attainment are positively associated with productivity increases (except during recession) • Over the past ten years more than half of GDP growth in OECD is related to labour income growth among tertiary-educated individuals 17 Higher education’s contribution to productivity and growth
  • 18. • Earnings of tertiary-educated individuals – Are approximately 1.6 times higher than of individuals with only upper secondary education, which implies a massive creation of wealth – The skills-based wage premium increases with age (from factor 1.4 to 1.7 for 25-34 and 55-64 age groups) • Higher education degrees yield even higher economic returns in the current recession – Relative unemployment risks decrease – Relative earnings of tertiary-educated grow – Private net present value over lifetime of 160 000 USD for a man and 110 000 USD for a woman (2010) 18 Higher education’s contribution to productivity and growth
  • 19. Australia Austria Belgium Canada Chile Czech Rep Denmark Estonia Finland France Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovak Rep Slovenia Spain Sweden Switzerland Turkey UK US R² = 0.1972 10 15 20 25 30 35 40 45 50 55 10 20 30 40 50 60 70 80 90 Percentageofthe25-64year-oldpopulationthat hasattainedtertiaryeducation(2011) Labour productivity: GDP per hour worked, current prices, USD (2011) 19 Tertiary-level attainment rate and labour productivity across countries
  • 20. Australia Austria Belgium Canada Czech Rep Denmark Estonia Finland France Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovak Rep Slovenia Spain Sweden Switzerland Turkey UK US R² = 0.1055 0 1 2 3 4 5 6 -1 0 1 2 3 4 5 Averageannualgrowthrateintertiary-level attainmentrate(2005-2011) Labour productivity average annual growth rate (2005-2011) 20 Tertiary-level attainment growth rate and labour productivity growth rate (2005-11)
  • 21. 2000 2005 2006 2007 2008 2009 2010 2011 20 22 24 26 28 30 32 34 32 33 34 35 36 37 38 39 40 Percentageofthe25-64year-oldpopulationthathas attainedtertiaryeducation Labour productivity OECD Average 21 Tertiary-level attainment rate and labour productivity over time
  • 22. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.80% -5% -4% -3% -2% -1% 0% 1% 2% 3% 4% 5% 6% LabourincomegrowthinGDPfortertiary- educatedworkers GDP growth (real percentage change from previous year) OECD average 22 Close relationship between GDP growth and labour income growth for tertiary-educated workers correlation of .80 between both data series
  • 23. 40 60 80 100 120 140 160 180 200 220 240 260 280 Hungary Slovenia CzechRepublic SlovakRepublic UnitedStates Ireland Poland Portugal Germany UnitedKingdom Luxembourg Netherlands Austria OECDaverage Switzerland Israel Korea Greece Italy Turkey Finland Japan France Spain Canada Estonia Australia Belgium Denmark Norway Sweden NewZealand Below upper secondary education Tertiary educationIndex Relative earnings Relative earnings from employment by level of educational attainment for 25-64 year-olds, upper secondary = 100 (2010 or latest available year) 24
  • 24. Earnings advantage of university degree increases with age Belgium France Germany Italy Spain UK OECD EU21 0 10 20 30 40 50 60 70 1012141618202224 Relativeearningadvantagebetween55-64and 25-34year-oldadultswithtertiaryA Percentage of the 55-64 year-old population with tertiary A attainment 25
  • 25. -1% 0% 1% 2% 3% 4% 5% Korea CzechRepublic Sweden Finland Canada Countryaverage Switzerland UnitedStates Norway UnitedKingdom Austria Germany France Ireland Denmark GDP Growth ISCED 5B/5A/6 ISCED 3/4 ISCED 0/1/2 Average GDP growth (real percentage change from the previous year) and labour income growth in GDP, by educational categories (2000-10) 26
  • 26. Difference in average earnings of tertiary educated workers (with skill level 2) and more highly skilled non-tertiary educated workers (with skill level 3) Higher skilled, less educated workers earn more Less skilled, tertiary educated workers earn more 27
  • 27. • Difference in average earnings of tertiary educated workers (with skill level 2) and more highly skilled non-tertiary educated workers (with skill level 4/5) 28 Higher skilled, less educated workers earn more Less skilled, tertiary educated workers earn more Difference in average earnings of tertiary educated workers (with skill level 2) and more highly skilled non-tertiary educated workers (with skill level 4/5)
  • 28. IMPACT OF EDUCATION AND SKILLS ON EMPLOYMENT 29
  • 29. 0 5 10 15 20 25 30 2009 2008 2010 30 Unemployment and the crisis Unemployment rates of 25-64 year-olds, by educational attainment level (2008, 2009 and 2010) 0 5 10 15 20 25 30 0 5 10 15 20 25 30 Brazil Norway Netherlands Korea Austria Australia Luxembourg NewZealand Mexico Switzerland Japan Sweden Italy Denmark Chile United… Czech… Belgium Israel Germany Slovenia Iceland France Finland Canada OECDaverage Poland Hungary Portugal UnitedStates Turkey Slovak… Greece Ireland Spain Estonia Tertiary education (%) Below upper secondary education (%) Upper secondary and post-secondary non-tertiary (%) Over 35% each year for the Slovak Republic
  • 30. Youth unemployment and skills are linked Australia Austria Belgium Canada Czech Republic Denmark Estonia Finland France Germany Germany Italy Japan Korea Netherlands Norway Poland Japan Spain Sweden United Kingdom United States Average 255 260 265 270 275 280 285 290 295 300 305 0 10 20 30 40 50 60 Literacyproficiency16-24year-olds(PIAAC)(2011) Youth unemployment rate 15-24 year-olds (2012) 31
  • 31. Hungary Poland Sweden Austria FranceEstonia Turkey New Zealand Finland Czech Republic Luxembourg Netherlands Slovak Republic Switzerland Germany n 10 20 30 40 50 60 70 80 90 100 65 70 75 80 85 90 Percentageof25-34year-oldsthathaveattainedanuppersecondary VETqualificationashighestlevelofeducation Employment rates for 25-34 year-olds with upper secondary VET qualifications Countries where expenditure in VET programmes is above the OECD average Countries where expenditure in VET programmes is below the OECD average % % OECDaverage OECD average 32
  • 32. Employment rate by educational attainment, 2005-11, 25-34 year-olds 50 55 60 65 70 75 80 85 90 95 100 2005 2006 2007 2008 2009 2010 2011 Belgium below upper sec Belgium upper secondary Belgium tertiary OECD av below secondary OECD av upper secondary OECD av tertiary EU21 av below upper secondary EU21 av upper secondary EU21 av tertiary 25-34 year-olds 33
  • 33. Employment rate by educational attainment, 2005-11, 45-54 year-olds 50 55 60 65 70 75 80 85 90 95 100 2005 2006 2007 2008 2009 2010 2011 Belgium below upper sec Belgium upper secondary Belgium tertiary OECD av below secondary OECD av upper secondary OECD av tertiary EU21 av below upper secondary EU21 av upper secondary EU21 av tertiary 45-54 year-olds 34
  • 34. Employment rate gap for 25-34 y-olds with less than upper sec, 2005-11 n 5 10 15 20 25 30 2005 2006 2007 2008 2009 2010 2011 Belgium difference in employment rates upper sec minus below secondary OECD difference in employment rates upper sec minus below secondary EU21 difference in employment rates upper sec minus below secondary 25-34 year-olds 35
  • 35. 36 Inactivity among very young youth Percentage of 15-19 year-old NEET (2011) 0 2 4 6 8 10 12 14 16 18 20 UnitedKingdom Norway Spain Italy OECDaverage Portugal Austria Ireland Switzerland Korea Denmark Netherlands Sweden Greece France Belgium Estonia Iceland Finland SlovakRepublic Germany CzechRepublic Hungary Poland Luxembourg % Not in education and unemployed Not in education and not in the labour force Not in education (Total)
  • 36. SKILLS DISTRIBUTION, GROWTH AND SOCIAL INEQUALITY 37
  • 37. 240 250 260 270 280 290 300 Italy Spain France Ireland Poland Northern Ireland (UK) Austria United States Germany Denmark England/N. Ireland (UK) Korea England (UK) Average Canada Slovak Republic Czech Republic Russian Federation³ Flanders (Belgium) Estonia Norway Sweden Australia Netherlands Finland Japan 25th Mean and .95 confidence interval for mean 75th 95th5th Score Skills of adults Literacy 7 points are roughly equal to one year of education 38
  • 38. 100 150 200 250 300 350 400 Italy Spain France Ireland Poland Northern Ireland (UK) Austria United States Germany Denmark England/N. Ireland (UK) Korea England (UK) Average Canada Slovak Republic Czech Republic Russian Federation³ Flanders (Belgium) Estonia Norway Sweden Australia Netherlands Finland Japan 25th Mean and .95 confidence interval for mean 75th 95th5th Score Skills of adults Literacy 39
  • 39. 220 230 240 250 260 270 280 290 300 Score Average16-65year-olds Average16-24year-olds Korea Germany Norway Average55-65year-olds Spain Finland France US UK Literacy skills in younger and older generations 40
  • 40. 41 Unequal distribution of skills unrelated to social/income inequality Australia Austria Canada Czech Rep Denmark Estonia Finland GermanyIreland Italy Japan Korea Netherlands Norway Poland Slovak Rep Spain Sweden United States Flanders UK 0.20 0.25 0.30 0.35 0.40 55 60 65 70 75 Gini coefficient Score-point difference between the 75th and 25th percentiles on the numeracy scale
  • 41. Australia Austria Canada Czech Rep Denmark Estonia Finland Germany Ireland Italy Japan Korea Netherlands Norway Poland Slovak Rep Spain Sweden United States Flanders UK 0.20 0.25 0.30 0.35 0.40 35 40 45 50 55 60 65 70 75 Gini coefficient Percentage of adults scoring below Level 2 on the numeracy scale Low foundation skills and social inequality are related 42
  • 42. A wide skills distribution relates positively to economic growth Australia Austria Canada Czech Rep Denmark Estonia Finland Germany Ireland Italy Japan Korea Netherlands Norway Poland Slovak Rep Spain Sweden United States Flanders UK 15000 20000 25000 30000 35000 40000 45000 50000 55 60 65 70 75 GDP per capita Score-point difference between the 75th and 25th percentiles on the numeracy scale 43
  • 43. A higher skills advantage of tertiary educated relates positively to economic growth Australia Austria Canada Czech Rep Denmark Estonia Finland Germany Ireland Italy Japan Korea Netherlands Norway Poland Slovak Rep Spain Sweden United States FlandersUK 15000 20000 25000 30000 35000 40000 45000 50000 40 45 50 55 60 65 70 75 80 85 GDP per capita Score-point difference in numeracy proficiency between tertiary-educated adults and those without upper secondary education 44
  • 44. NATIONAL SKILLS PROFILES 45
  • 45. • Learning outcomes at 15 (PISA): – Slightly above average performance, but strongly improving – High impact of socio-economic background • Educational attainment (EAG) – Very high secondary attainment, but low (and very selective) tertiary participation and attainment rate – Strong vocational education sector – High youth employment • Adult skills (PIAAC): – In literacy below, in numeracy above average Germany 46
  • 46. • Learning outcomes at 15 (PISA): – Average performance, stable, with high social segregation • Educational attainment (EAG) – High and increasing tertiary participation and attainment rates • Adult skills (PIAAC): – Around average for literacy, below average for numeracy – No progress from older to younger generations United Kingdom 47
  • 47. • Learning outcomes at 15 (PISA): – Average performance and declining – Huge inequalities and still aggravating • Educational attainment (EAG) – Attainment rates have caught up with rest of Europe, but at higher levels still below • Adult skills (PIAAC): – Significantly lower than other countries – Younger generations much higher than older, but still below average France 48
  • 48. • Learning outcomes at 15 (PISA): – Average performance and slowly further declining – Few high-performers and many low-performers • Educational attainment (EAG) – Low but increasing educational attainment, even very (too?) strongly increasing at tertiary level – High graduate unemployment • Adult skills (PIAAC): – Very low proficiency in literacy and numeracy, for all age groups Spain 49
  • 49. • Learning outcomes at 15 (PISA): – Below average performance, but improving at both ends of distribution • Educational attainment (EAG) – Very low attainment rates at secondary and tertiary level, slowly improving • Adult skills (PIAAC): – Significantly below average for both literacy and numeracy skills Italy 50
  • 50. • Learning outcomes at 15 (PISA): – FL among sub-top performers; FR below average – Huge impact of socio-economic background • Educational attainment (EAG) – High attainment rates both for secondary and tertiary levels, but expansion in tertiary participation/attainment has come to standstill • Adult skills (PIAAC): – High literacy and numeracy skills but with still high % of low-skilled adults Belgium / Flanders 51
  • 51. A FEW CONCLUSIONS 52
  • 52. • No definite theory on which human capital systems contribute best to knowledge- economies and inclusive societies • More academic skills or more vocational skills? • Towards a more effective and more equitable distribution of educational investments over the lifetime? • The long-term costs of low educational attainment and low skills are far higher than the cost of risks of over-schooling A few questions and conclusions 53
  • 53. Thank you ! dirk.vandamme@oecd.org www.oecd.org/edu/ceri twitter @VanDammeEDU 54