Tertiary Education for the New Economy

COVID-19 has thrown the spotlight on epidemiologists and public health experts. For over a year now, we have lapped up any news about the researchers developing the vaccines for the virus and the heroics of health professionals. But tackling major global pandemics and addressing learning gaps across the world are not the only benefits that tertiary education brings us. It also has an important role to play in addressing the learning gap there still is in many countries.   

A British Council report provides a thorough examination of how post-compulsory education can create positive change in individuals, communities and countries. This report, authored by the Centre for Education and International Development at University College London, found that tertiary education contributes positively to enhancing the quality of life of graduates and magnifies their influence. Tertiary education can and does make positive contributions to both economic and non-economic development in several different ways.

There is plenty of evidence as to the role of tertiary education’s contribution in economic development. It can support economic growth and also leads to enhanced earnings for individual graduates. The skills gained and enhanced through tertiary education lead to increased productivity in the workforce. Tertiary education plays an important role in developing professional capabilities in the countries studied.

But there is evidence that tertiary education also supports non-economic development. For example, it enhances the know-how to mitigate some of the effects of climate change. The skills gained through tertiary education have a positive impact on the health and education of individuals and nations. Also, there is evidence that tertiary education provides support for peace processes, assistance to civil society organisations in holding governments to account, and spurs advocacy for those who are subject to discrimination and exclusion.

Following the ongoing impact of COVID-19, it is important that tertiary education sectors are supported and strengthened to help protect the weakest and most vulnerable in society. 

The life chances of the better educated are rising. Some 43% of 25-34 year-olds in OECD countries had a tertiary degree in 2016, up from 26% in 2000. The share of 25-34 year-olds without upper secondary education has also fallen, from 25% in 2000 to 16% in 2016.

Following the ongoing impact of COVID-19, it is important that tertiary education sectors are supported and strengthened to help protect the weakest and most vulnerable in society.

In most OECD countries, education now begins for most children well before they are five years old – 78% of three-year-olds are enrolled in early childhood education across the OECD. Across the OECD, at least 90% of students spend an average of 14 years in education, although this ranges from 10 years in Mexico and Turkey to 17 years in Norway. In Malta, the average number of years spent in education is 11, which is the European average.

But, although more adults are reaching upper secondary level, completion remains problematic. Among countries with available data, approximately one in four students who enrolled had not graduated after two years from the theoretical end date of the programme and four out of five of these students have dropped out of education altogether. This is a critical loss as the unemployment rate for 25-34 year-olds who failed to complete upper secondary education is close to 17% in the OECD, compared to 9% for those who did.

Unfortunately, Malta has made little progress in tertiary education completion. Over six years, the percentage of 20-24 year olds who go to a Higher Education Institution has only increased minimally, while that in Ireland, for example, has increased considerably, not to mention Greece. It is no wonder that the Emerald Island attracts so many new enterprises and higher-value-added jobs. And, although Slovenia has seen a reduction in its percentage, it is still more than double Malta’s rate.

One other shortcoming of tertiary education in Malta is the poor standing of the sciences (natural, maths, and engineering), with just an 11% share. This explains why Malta cannot be a good location for FDI in bio-technology and science-based industries.  Even worse is the standing of ICT, with just a 6% share.

Another challenge is how to attract women to certain fields of study. Though females accounted for over 57% of graduates in 2019, they tend to avoid the sciences, with only 36% graduating in them. Again, females seem to avoid ICT like a plague, with just 6% graduating in this field.

One worrying factor is the sharp drop-off in the level of tertiary education subsequent to a first degree. Only 5.7% of 20-24 year olds proceed to do a Master’s, half the percentage of those in the EU and Slovakia, for example. The percentage of those who do Doctorate is risible, being a tiny 0.1% of the age cohort, though this is also the picture in most of the EU, with the exception of Ireland, Spain and France where the percentage is double Malta’s.

But, some people might ask whether there is any empirical evidence for the claim that tertiary education is a key factor in economic growth. There are several research papers on this. I quote one by Paola Azar Dufrechou (Department of Applied Economics, University of Barcellona, 2016 , “The economic impact of tertiary education: the role of public spending and skill choices”).

Dufrechou uses a panel of 22 high-income OECD countries and 19 upper middle-income countries at 5-year intervals from 1970 to 2010 to estimate the link. Based on the findings, she reaches three broad conclusions. First, the growth-enhancing effect of tertiary education and the rate of technological progress depend on the tertiary tilt. As a result, and contrary to what could be expected, the emphasis in public investments towards the “upper tail” of the education distribution is not favourable in economic terms when obtained at the expense of lower education levels.

Second, the fraction of Science & Technology students consistently emerges as an important source of economic growth when compared to other fields of knowledge. This is in line with the idea that individual’s decisions to accumulate different types of human capital may affect the economy’s long run potential.

Third, the S&T knowledge acts as a sort of fixed effect contributing to set the level of the production function for each country.

Her paper finds that a higher share of tertiary educated people accelerates economic growth and explains cross country-differences in the level of income per capita. This general picture goes along with the usual economic development principle that increasing education yields positive macroeconomic and social returns.

Those who are left behind pay an increasing price, in terms of worsening employment and low wages.

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