Transcript 幻灯片 1

Investing in Human Capital:
Policy Priorities for Canada
W. Craig Riddell
Department of Economics
University of British Columbia
IRPP Canadian Priorities Agenda Conference
Toronto March 8-9 2007
Meaning of human capital

Human capital refers to the skills, competencies and
knowledge possessed by individuals

These skills and competencies include both cognitive
skills such as literacy and numeracy and non-cognitive
skills such as the ability to get along with others
Influences on human capital

Human capital is the outcome of many influences, both
hereditary and environmental.

Three important influences are
(i) the nurturing, nutrition and stimuli received in the
early years of life
(ii) formal education
(iii) work experience and adult education and training

Particular attention will be paid to factors that can be
influenced by public policy
Why human capital matters

Contribution to individual well-being

Formal schooling is one of the best predictors of “who gets ahead”

Better-educated workers earn higher wages, have greater earnings
growth over their lifetimes, experience less unemployment, and
work longer

Higher education is also associated with longer life expectancy and
better health

Growing evidence that these links are causal in nature

Acquiring new skills also has some consumption value
Why human capital matters
(cont’d)

Non-market and social benefits
These includes:

increased civic participation

reduced participation in criminal activities

higher rates of innovation and economic growth

inter-generational effects: improved child health, education and
well-being
Why human capital matters
(cont’d)

Emergence of knowledge society and growing demand
for skills

Technological change and globalization have led to growing
demand for highly skilled workers and changes in the nature of
skills needed in the workplace

These forces also appear to have contributed to widening
inequality between more- and less-skilled workers in employment
and wages

Growing concern about future skills shortages
Why human capital matters
(cont’d)

Emergence of knowledge society and growing demand
for skills (cont’d)

'New growth theory' emphasizes the importance of human capital
in the creation of new knowledge and in the growth of living
standards over time

In social policy, greater emphasis on individual responsibility and
on providing a “hand up” rather than “hand out” – “good skills are
an essential part of the social safety net"
Why human capital matters
(cont’d)

Distributional consequences and equality of
opportunity

Human capital formation may ameliorate pressures for widening
inequality by increasing the supply of more skilled workers and
reducing the supply of the less skilled

Education is also often regarded as a mechanism for promoting
equality of opportunity and social mobility
Key features of
human capital decisions

These are principally investment decisions: individuals
incur costs in the present in return for benefits in the future

Benefits of human capital acquisition typically accrue over
a long period – e.g. higher earnings stream and improved
health over many years

Individuals making such decisions need to compare the
present value of the gradual accumulation of future
benefits to the current costs

In order to make good decisions, individuals need to be
“far sighted” rather than myopic
Key features of human capital
decisions (cont’d)

Indeed, benefits of human capital investments are
transferred across generations

A major component of the costs of acquiring human capital
is typically the opportunity cost -- the income foregone by
not working

The more skills an individual acquires, the higher the
opportunity cost

Evidence indicates that “skill begets skill” – those with a
good base of skills can more readily acquire additional
skills
Key features of human capital
decisions (cont’d)

Each of these factors implies that the return on human
capital investments will be larger if the investments are
made early in the life cycle rather than later

Because the benefits accrue in the future human capital
investments are generally risky investments
Is government involvement in human
capital formation warranted?

Government involvement in the provision and financing of
education is widespread

This involvement may be justified on both efficiency and
equity grounds
Is government involvement in human
capital formation warranted? (cont’d)

The efficiency rationales involve potential "market
failures"

Social benefits from education in excess of private benefits: such
"external benefits" may result in under-investment in education in
the absence of government intervention

Liquidity constraints: credit market failures that inhibit individuals
from making productive investments. This may argue for
government involvement in the financing of education
Is government involvement in human
capital formation warranted? (cont’d)

The efficiency rationales involve potential "market
failures" (cont’d)

Risks associated with human capital investments are generally
non-diversifiable

Market for education suffers from pervasive problems of
incomplete information. Government intervention could enable
individuals to make more informed decisions. Public involvement
in developing, publicizing and enforcing standards may be
beneficial
Is government involvement in human
capital formation warranted? (cont’d)

The efficiency rationales involve potential "market
failures" (cont’d)


“Samaritan’s dilemma” -- even altruistic parents may not take into
account the consequences of their child-rearing decisions on those
outside of the immediate family
Another rationale for government intervention is based on the view
that youths may make poor or myopic decisions, choices that
imply social as well as private costs
Is government involvement in human
capital formation warranted? (cont’d)

Equity reasons: promotion of equal opportunity and social
mobility

Increased skill formation may ameliorate pressures for
widening inequality in economic and social outcomes
Evidence on rates of return to
human capital investments

Private returns associated with higher earnings

Many researchers have produced estimates of the “economic return”
to schooling using conventional multivariate methods

Canadian studies using conventional methods obtain estimated real
rates of return of approximately 8-10 percent

Such estimates compare favourably with rates of return on physical
capital investments
Evidence on rates of return to
human capital investments (cont’d)

Private returns associated with higher earnings (cont’d)



However, these estimates do not control for unobserved
factors such as ability and perseverance that may influence
both educational attainment and labour market success
Such unobserved factors are likely to imply that conventional
estimates of the return to schooling are biased upwards
Important advances have recently taken place in our
understanding of the relationship between education and
labour market success
Evidence on rates of return to
human capital investments (cont’d)

Private returns associated with higher earnings (cont’d)



These advances have occurred from the use of natural
experiments that employ variations in educational
attainment brought about by policy changes or unique
events
Such variations allow one to identify the causal impact of
education
A large number of such studies have now been carried out in
numerous countries
Evidence on rates of return to
human capital investments (cont’d)

Private returns associated with higher earnings (cont’d)


Several recent Canadian studies employ this “natural
experiment” approach
Lemieux and Card (2001) study the impact of the Veterans
Rehabilitation Act—the Canadian “G.I. Bill”. They estimate
the rate of return to schooling to be 14 to 16 percent
Evidence on rates of return to
human capital investments (cont’d)

Private returns associated with higher earnings (cont’d)



Compelling evidence comes from research on the effects of
changes in compulsory schooling laws in Canadian provinces
over the past century. Oreopoulos estimates rates of return
in the 12 to 15 percent range from the additional secondary
level schooling brought about by the changes in these laws
This recent research concludes that for certain groups the
returns to additional education are particularly high –greater
than conventional estimates that are believed to be biased
upwards
Similar pattern of results found in many other countries
Evidence on rates of return to
human capital investments (cont’d)

Private returns associated with higher earnings (cont’d)



Policy interventions that raised educational attainment -typically affecting groups with relatively low levels of
education -- had large beneficial effects on the lifetime
earnings of these individuals
Returns to past incremental investments in education often
exceeded the average return for the population as a whole
Results suggest that investments at the margin in education
need not yield below-average returns, as would be the case
if there were diminishing returns to all human capital
investments
Evidence on rates of return to
human capital investments (cont’d)

Non-market and social returns

Important advances have also taken place in understanding nonmarket and social consequences of education

Many studies find that educational attainment is correlated with
numerous individual and social outcomes such as improved health,
greater civic participation and reduced participation in crime

However, do these correlations reflect a causal impact of education
on these outcomes?

Recent research using natural experiments has strengthened the
case for believing that the non-market and social benefits of
education are substantial
Evidence on rates of return to
human capital investments (cont’d)

Non-market and social returns (cont’d)

Summarizing this evidence yields the following approximate
estimates of the non-market and social returns to schooling:
Innovation, knowledge creation and
economic growth
1-2 percentage points
Static knowledge spillovers
0-1 percentage points
Non-market external benefits
3-4 percentage point
Social benefits associated with
taxation of higher incomes
2
Total
percentage points
6-9 percentage points
Evidence on rates of return to
human capital investments (cont’d)

Non-market and social returns (cont’d)

Non-market benefits include the social benefits associated with
reduced crime, increased civic participation, improved health
and longevity and inter-generational effects

Some of the intergenerational effects and the impacts of
education on health are private in nature, but in both cases there
is a social benefit in addition to the private benefit
Evidence on rates of return to
human capital investments (cont’d)

Non-market and social returns (cont’d)

The estimated (real) social return of 6-9 percent is arguably a
conservative estimate

However, there is more uncertainty about the magnitudes of the
non-market and social benefits of schooling than is the case for
earnings
Current state of human capital
investment in Canada

Canada invests a substantial amount in formal education

Canada among the top G-7 and OECD countries in terms
of expenditure per student at the elementary/secondary and
post-secondary levels

Canada is about average among the OECD and G7 in
terms of the fraction of GDP devoted to formal education
Current state of human capital
investment in Canada (cont’d)

Although traditionally high by international standards, over
the past decade Canadian expenditure on education has
declined relative to most other OECD countries

For example, educational expenditure as a percentage of
GDP has dropped from 25% above the OECD average in
1995 to equal to the OECD average in 2003
Current state of human capital
investment in Canada (cont’d)

One consequence of this substantial expenditure is a
population that is well educated by international standards

Compared to the U.S., Canada has lower educational
attainment at both the bottom and top of the education
distribution. Where Canada stands out is in the middle of
the distribution
Current state of human capital
investment in Canada (cont’d)


A unique feature of Canada’s education system is the
substantial investment in non-university post-secondary
education. The proportion of Canada's population with a
college/trades diploma is much higher than that of any
other OECD country
Another noteworthy feature is the limited public
expenditure in the “early years” – prior to the beginning of
formal schooling at age six
Current state of human capital
investment in Canada (cont’d)

Although the overall educational attainment of Canadians
is impressive, high school completion has been a weak
spot for many years. Canada’s secondary school
graduation rate is near the bottom of the G-7 and well
below the OECD average

Although the high school drop out rate has been a
declining over time, the level remains a source of concern

The high school drop out rate is much higher among males
(29%) than among females (20%) and is especially high in
rural areas and among Aboriginal students
Current state of human capital
investment in Canada (cont’d)

Important advances have occurred in the provision of
information on student achievement, a situation that
contrasts sharply with that of 20 years ago

Students, parents, teachers, school administrators and
policy makers now have access to a great deal more
information about educational outcomes than in the past,
and can base their decisions on a much improved
information base
Current state of human capital
investment in Canada (cont’d)

Recent international data on Canadian student achievement
paint a mixed picture. Results from TIMSS, curriculumbased tests of achievement in mathematics and science,
indicate that Canadian student achievement is satisfactory
but not as good as one might expect given Canada's
expenditure on elementary and secondary schooling

In contrast, 15-year-old Canadian students performed very
well in the PISA tests that assessed the ability to apply
knowledge in reading, mathematics and science
Current state of human capital
investment in Canada (cont’d)

In reading, Canadian students were the top performers in
the G-7, while in mathematics and science Canada ranked
among the top three G-7 countries

The PISA results suggest that Canada appears to obtain
reasonably good "value for money" from the elementary
and secondary school system, at least as measured by
average student achievement in reading, mathematics and
science
Current state of human capital
investment in Canada (cont’d)

There are substantial variations in student achievement
across Canadian provinces. Some provinces—such as
Alberta and B.C.—are able to obtain very high levels of
achievement. In the Atlantic provinces, student
achievement is relatively low by international standards

Data on student achievement provide some information on
the skills of those who will be entering the labour force in
the future. The International Adult Literacy Survey (IALS)
provides measures of the skills of the adult population that
are comparable across countries and language groups
Current state of human capital
investment in Canada (cont’d)

The literacy and numeracy skills of Canada’s adult
population are above average among the G-7 countries that
participated in IALS

Canada, like the U.S. and U.K., has a high variance across
the population in its literacy skills compared to European
countries such as Germany

However, the 1994 IALS and the 2003 IALSS find that a
disturbingly large fraction of the Canadian population has
low levels of literacy and numeracy
Current state of human capital
investment in Canada (cont’d)

By international standards, older and less well-educated
Canadians have relatively poor literacy skills, whereas
younger and well-educated Canadians have relatively good
literacy skills compared to their counterparts in other G-7
countries

Immigrants and aboriginals also have low literacy and
numeracy skills, controlling for education and age
Implications for policy

One distinguishing feature of existing policy is substantial
public and private investment in elementary, secondary
and post-secondary education

The empirical evidence indicates that, on average, the
return to these investments is high

Furthermore, there is evidence of substantial social
benefits
Implications for policy (cont’d)

However, high average returns to existing expenditures do
not imply that additional public investments are warranted.
What matters is the return at the margin

The return at the margin is likely to be highest in areas in
which we currently devote relatively limited public
resources to skill formation

In addition, the rate of return to marginal investments is
also more likely to be high for investments made early in
the life cycle
Implications for policy (cont’d)

A second distinguishing feature of the Canadian situation
is that there are some important gaps in the skills of
particular groups

Looking at the population as a whole, the resources
devoted to human capital formation and the associated
outcomes are reasonably good

However, despite satisfactory average performance, some
groups have skill levels that are inadequate and present a
serious barrier to maintaining a decent standard of living
and to being able to fully participate in society
Implications for policy (cont’d)

These policy challenges could be addressed by increasing
the public resources devoted to human capital formation in
three specific areas

These areas are promising for two reasons. First, the rate of
return at the margin to additional investments is likely to
be high. Second, all three interventions would address
important gaps that result in low skills among some groups
or in unequal opportunity
Policy proposals
Early childhood education (ECE) intervention
Rationale:

Many children start school with significant academic
disadvantages

Many social and emotional problems are evident prior to
school entry

Evidence suggests it is important for children to get off on
the right foot in school
Early childhood education (ECE) intervention
(cont’d)
Rationale (cont’d):



Many skills are best learned early in life
“Skill begets skill” – those with a good skill base are more
able to acquire additional skills
Early interventions result in a long period over which
benefits can accrue
Early childhood education (ECE) intervention
(cont’d)
Rationale (cont’d):


Difficult to fix problems later – e.g. employment programs
focused on those experiencing labour market difficulties
have been found to be relatively ineffective
Improved school readiness may improve outcomes of K-12
by reducing the variability of skills at school entry age
Early childhood education (ECE) intervention
(cont’d)
Rationale (cont’d):

Limited public investment suggests that potential returns
from investments at the margin may be high

However, it is important to take into account the existing
private investment
Early childhood education (ECE) intervention
(cont’d)
Rationale (cont’d):

Over 50% of Canadian pre-school age children are
enrolled in some form of child care, and some of these
programs have a significant educational component

In addition, parents and community organizations invest
substantial time and money in enhancing the skills and
competencies of children

ECE programs targeted on those who would not otherwise
get a good start may be very beneficial for participants and
for society
Early childhood education (ECE) intervention
(cont’d)
Evidence supporting this choice of policy:

Considerable U.S. experience with ECE programs that aim
to improve the skills of disadvantaged children

Evidence is available on: (i) small scale model programs
focused on specific target populations and (ii) publicly
funded large scale programs such as Head Start

Both types of interventions are restricted to children from
disadvantaged backgrounds
Early childhood education (ECE) intervention
(cont’d)
Evidence supporting this choice of policy (cont’d):

The most convincing evidence comes from small scale
demonstration projects with randomized research designs

Evidence from studies of model programs with
randomized assignment indicates that ECE programs
targeted on disadvantaged families can have long-lasting
and large beneficial effects

Most such interventions do not have long term effects on
IQ
Early childhood education (ECE) intervention
(cont’d)
Evidence supporting this choice of policy (cont’d):

However model ECE projects find evidence of increased
student achievement, decreased grade retention, less
utilization of special education, less crime and delinquency
and higher probability of completing high school
Early childhood education (ECE) intervention
(cont’d)
Evidence supporting this choice of policy (cont’d):

Compelling evidence comes from:

Perry Preschool program, a half-day educational program
for children aged 3 to 4 during the academic year plus
teacher home visits with parents

This program, which has now followed participants to age
40, had significant impacts on adult income, the
probability of owning a home, welfare receipt, and number
of arrests
Early childhood education (ECE) intervention
(cont’d)
Evidence supporting this choice of policy (cont’d):

Carolina Abecedarian program -- a full-day year-round child
care program with an intensive education component. This
intervention offered full day educational experiences to
children from early in the first year of life until they entered
kindergarten

This demonstration project also employed random
assignment and followed participants to age 21

Benefits included increased maternal earnings, decreased K12 schooling costs, and increased earnings of those receiving
early childhood education
Early childhood education (ECE) intervention
(cont’d)
Evidence supporting this choice of policy (cont’d):

Benefits and costs:

Perry Preschool program: using data from the age-40 follow
up, estimated return to the public is approximately a $7 return
for every dollar invested

An important part of the social benefits arises from the
reduction in crime. But even without accounting for reduced
criminal activity, the benefits to the public are more than
double the costs of the pre-school program
Early childhood education (ECE) intervention
(cont’d)
Evidence supporting this choice of policy (cont’d):

There may also be inter-generational effects not yet detected
because treatment group women were more likely to form a
two-parent family and had lower rates of teenage pregnancy

A recent cost-benefit analysis of the Carolina Abecedarian
program also finds evidence of public benefits in excess of
the cost of the intervention
Early childhood education (ECE) intervention
(cont’d)
Interpreting the evidence from model programs:

Evidence from small scale demonstration projects – even
those with the benefit of random assignment – needs to be
interpreted with care

Not all of the features of model programs such as quality of
staff and intensity of services can be replicated in large scale
publicly-funded programs

In addition, the results may not generalize to other sites and
target groups
Early childhood education (ECE) intervention
(cont’d)
Evidence from ongoing large scale ECE programs:

Leading example is the U.S. Head Start program which has
been in operation since the mid-1960s

We expect smaller impacts because Head Start generally
provides less intensive services, has fewer teachers per child,
and hires less qualified staff

Nonetheless, there is evidence of significant benefits of Head
Start and similar public programs
Early childhood education (ECE) intervention
(cont’d)
Evidence from ongoing large scale ECE programs (cont’d):

Some studies find that initial program gains tend to fade
throughout elementary school. Fading out appears to be
caused by low subsequent school quality among Head Start
participants

Recent evidence of long term positive effects of Head Start.
White children who attended Head Start are more likely to
complete high school and attend college. African-American
children who attended Head Start are less likely to have been
charged with a crime
Early childhood education (ECE) intervention
(cont’d)
Evidence from ongoing large scale ECE programs (cont’d):

Another on-going program is the Chicago Child-Parent
Centers, a federally funded program located in high-poverty
neighbourhoods in Chicago. These centers offer educational
interventions to children from preschool through grades 2 to
3

Children who participated in this program at age 3 or 4 were
less likely to require school remediation services such as
special education placement and grade retention, were more
likely to complete high school, and were less likely to
commit crimes as juveniles and young adults
Early childhood education (ECE) intervention
(cont’d)
Interpreting the evidence from model programs (cont’d):

A cost-benefit analysis concludes that the benefit – cost ratio
for this program ranges from 6 to 10. As was the case for
Perry Preschool, an important part of the benefits comes from
reduced crime
Early childhood education (ECE) intervention
(cont’d)
Additional findings from U.S. experience:

The magnitudes of the short-term effects on cognitive
development and other outcomes appear to be at least
roughly related to the intensity, breadth and amount of
involvement of the educators with children and their families

In several model ECE programs the beneficial effects are
often greater for the more disadvantaged children in the
treatment group or the children with the least educated
mothers
Early childhood education (ECE) intervention
(cont’d)
Additional findings from U.S. experience (cont’d):

Although beneficial effects may be greater for children from
low-income or low SES families, meaningful effects do not
cease if a child's family moves above the poverty line

Long term effects on educational achievement and attainment
may also be greater for girls than for boys
Early childhood education (ECE) intervention
(cont’d)
Implications of evidence:

U.S. evidence needs to be interpreted with care. A significant
part of the high benefit/cost ratios of the Perry Preschool
Program and the Chicago Child-Parent centers is associated
with the reduction in criminal activity among young African
American men. It seems unlikely that these benefits would be
as large in Canada

Another consideration is that most ECE interventions are
centre-based, and some negative effects have been reported
for child care relative to care in the home
Early childhood education (ECE) intervention
(cont’d)
Implications of evidence (cont’d):

Studies from several countries and settings have concluded
that child care has positive effects on children’s cognitive
skills but negative effects on behavioural skills

Several U.S. studies find this pattern, as does an evaluation of
the Quebec experience with provincially subsidized childcare

Relative to children in the rest of Canada (where no major
expansion of child care took place), Quebec children
displayed increased anxiety and hyperactivity, reduced social
and motor skills, and increased aggressive behaviour
Early childhood education (ECE) intervention
(cont’d)
Implications of evidence (cont’d):

Also some physiological evidence that child care
environments are stressful for children: patterns of cortisol
production differ in children when at child care than when
the same children are at home

Evidence of negative behavioural effects from child care is
by no means universal. Some studies conclude that quality
matters, and that high quality child care can improve both
cognitive and behavioural outcomes

Also some evidence that, when child care is combined with
early childhood education, the curriculum matters
Early childhood education (ECE) intervention
(cont’d)
Conclusion:

On balance the evidence suggests that an ECE program
targeted on disadvantaged children and their families could
bring substantial benefits relative to the costs of funding the
program

However, evidence of some negative behavioural effects
associated with child care suggests that we should proceed
cautiously in this area and carefully monitor and evaluate the
impacts of ECE interventions
Early childhood education (ECE) intervention
(cont’d)
Should an ECE program be universal or targeted on
disadvantaged families?

The principal advantage of targeting is that it focuses public
resources on those families and children for whom the
program is likely to have the greatest benefits relative to
costs

A universal program would spend public resources on a
substantial number of children who would receive only
modest benefits from the intervention
Early childhood education (ECE) intervention
(cont’d)
Should an ECE program be universal or targeted on
disadvantaged families? (cont’d)

Compelling evidence that children's development can be
impaired through deprivation (both inadequate nutrition and
inadequate attention and appropriate stimuli) in the early
years

Evidence that cognitive and social skills can be improved in
“normal” children via extra stimulation is less conclusive
Early childhood education (ECE) intervention
(cont’d)
Should an ECE program be universal or targeted on
disadvantaged families? (cont’d)

However, there are also disadvantages associated with
targeting

Determining who is eligible for the program and who is not is
costly

Targeting programs on family income can have adverse
effects on behaviour
Early childhood education (ECE) intervention
(cont’d)
Should an ECE program be universal or targeted on
disadvantaged families? (cont’d)

Programs targeted on disadvantaged families may lack
widespread public support and may tend to be low quality
programs

Appears there is no simple dividing line in terms of family
income or parental education that distinguishes between
children with low and good levels of school readiness
Early childhood education (ECE) intervention
(cont’d)
Should an ECE program be universal or targeted on
disadvantaged families? (cont’d)

Given these problems, an option would be a program with a
basic level of services on a universal basis but that provides
more intensive services to children and families at risk of
developmental failure

Although this approach has some appealing features, I am not
convinced that the evidence supports a universal program
along these lines at the present time
Early childhood education (ECE) intervention
(cont’d)
Should an ECE program be universal or targeted on
disadvantaged families? (cont’d)

For these reasons I conclude that Canada should introduce an
ECE program targeted on children at risk of developmental
and education failure. The case for doing so seems quite
strong

There is a great deal yet to be learned about how to best
design and operate such a policy

Considerable scope for experimentation and careful
evaluation of the consequences of policy interventions in this
area
Raise the compulsory school age to 18 and improve
vocational programs in secondary school for those at risk
of dropping out
Rationale:

The lower tail of the distribution of student achievement
and adult literacy is a concern

Some students finish their formal schooling with limited
cognitive skills

Despite recent gains Canada still has a relatively high
dropout rate from secondary school
Raise the compulsory school age to 18 and improve
vocational programs in secondary school for those at risk
of dropping out (cont’d)
Rationale (cont’d):

The trend over the past several decades has been one of
declining opportunities for those with less than high school
education

Although the current resource boom represents a reversal
of the long term, the long term prospects for those with
limited formal education are poor
Raise the compulsory school age to 18 and improve
vocational programs in secondary school for those at risk
of dropping out (cont’d)
Rationale (cont’d):

As a country, we invest relatively little ex ante in those that
do not complete high school

However, we do pay for some of the subsequent costs
associated with limited education and skills

Considerable evidence that it is difficult to fix problems
associated with limited skills at a later stage
Raise the compulsory school age to 18 and improve
vocational programs in secondary school for those at risk
of dropping out (cont’d)
Rationale (cont’d):

Empirical evidence indicates that any amount of additional
formal schooling at the secondary school level yields
substantial future benefits

High school completion is emphasized because of evidence
that this is a key educational milestone that has significant
consequences for a variety of subsequent outcomes
Raise the compulsory school age to 18 and improve
vocational programs in secondary school for those at risk
of dropping out (cont’d)
Rationale (cont’d):

Interventions that could be used to improve high school
completion:

Raise the compulsory school attendance age

Devote more resources to vocational and cooperative education
programs in high school, targeted on those at risk of dropping out

Pay teenagers from poor families to stay in school (U.K. model)

Mount stay-in-school campaigns
Raise the compulsory school age to 18 and improve
vocational programs in secondary school for those at risk
of dropping out (cont’d)
Rationale (cont’d):

I advocate increasing the compulsory school age from the
current level of 16 (in most provinces) to 18 years of age

Much recent research indicates that past changes in
compulsory schooling laws produced large benefits for
those affected by the legal changes

These studies show that those who would have left school
at an earlier age would have been making a serious mistake
Raise the compulsory school age to 18 and improve
vocational programs in secondary school for those at risk
of dropping out (cont’d)
Rationale (cont’d):

Although there is no assurance that the future will be the
same as the past, there is good reason to believe that those
who leave school now at the age of 16 are making a
mistake

Furthermore, recent changes in the compulsory school
leaving age in U.S. states appear to have had beneficial
effects similar in magnitude to those from previous
increases
Raise the compulsory school age to 18 and improve
vocational programs in secondary school for those at risk
of dropping out (cont’d)
Rationale (cont’d):

In contrast, we currently know little about the
consequences of stay-in-school programs that principally
rely on information campaigns and moral suasion

The effectiveness of the U.K. policy of paying 16 to 18
year-olds from low income families a maintenance
allowance to remain in school has yet to be established
Raise the compulsory school age to 18 and improve
vocational programs in secondary school for those at risk
of dropping out (cont’d)
Rationale (cont’d):

Several studies document large improvements in adult
outcomes from increases in the compulsory school
attendance age in Canada, the U.S., the U.K., France,
Denmark, Sweden and Norway
Raise the compulsory school age to 18 and improve
vocational programs in secondary school for those at risk
of dropping out (cont’d)
Rationale (cont’d):

Oreopoulos (2006) examines the impacts of compulsory
schooling laws in Canadian provinces over the period 1920
to 1990

He finds that those compelled by these laws to remain in
school longer than they would otherwise have done
experienced higher income as adults, lower unemployment,
and reduced incidence of poverty

Completion of an extra grade of school produced an
average increase in annual income of 9%-15%
Raise the compulsory school age to 18 and improve
vocational programs in secondary school for those at risk
of dropping out (cont’d)
Rationale (cont’d):

Studies of the experience of other countries also indicate
large gains in adulthood from past changes in compulsory
school laws

U.S. and U.K. studies estimate that annual earnings are
10% - 14% higher for students compelled to remain in
school an additional year
Raise the compulsory school age to 18 and improve
vocational programs in secondary school for those at risk
of dropping out (cont’d)
Rationale (cont’d):

Additional required schooling is also estimated to:

substantially reduce mortality

lowers the likelihood of committing a crime and the probability of
incarceration

reduce the chance of teenage pregnancy

result in improved health and greater overall satisfaction with life
Raise the compulsory school age to 18 and improve
vocational programs in secondary school for those at risk
of dropping out (cont’d)
Rationale (cont’d):

We cannot be certain that increases in the school
attendance age today would have similarly large beneficial
effects

However, the rationale for raising the minimum school
leaving age today is similar to that used in the past: the
need for greater skills and knowledge in order to
participate meaningfully in society and in the work force
Raise the compulsory school age to 18 and improve
vocational programs in secondary school for those at risk
of dropping out (cont’d)
Rationale (cont’d):

To be effective the policy must be enforced

Additional resources will also be needed in the later years
of secondary school

The students who would otherwise leave high school
would probably benefit more from programs designed with
their characteristics in mind

This suggests devoting more resources to vocational and
cooperative education programs in high school, designed
for those at risk of dropping out
Raise the compulsory school age to 18 and improve
vocational programs in secondary school for those at risk
of dropping out (cont’d)
Rationale (cont’d):

Several Scandinavian countries introduced educational
reforms along these lines, and were able to achieve
significant reductions in the high school dropout rate

Some experience with approaches adopted for specific
groups at high risk of dropping out, such as Aboriginal
students, students in rural areas, male students, and young
mothers
Raise the compulsory school age to 18 and improve
vocational programs in secondary school for those at risk
of dropping out (cont’d)
Rationale (cont’d):

The evidence indicates that these investments would yield
benefits to the individuals affected by the change in the
laws, as well as society as a whole

In addition, such changes would offset tendencies toward
widening inequality that would otherwise occur
A national merit-based scholarship program targeted on
youths from low income families and available to those
with a modest level of achievement
Rationale (cont’d):


The returns to PSE basically reflect the outcome of a “race”
between growth in demand and growth in supply
Since the mid-1990s the returns to university programs
relative to high school and relative to college have
increased
A national merit-based scholarship program targeted on
youths from low income families and available to those
with a modest level of achievement
Rationale (cont’d):

This recent evidence suggests that the supply of university
graduates is not keeping pace with the growth in demand

Most forecasts also predict continued strong growth in the
demand for PSE graduates

Recent analysis by Fortin and Lemieux (2006) raises
questions about the extent to which Canadian universities
responded to increased demand for post-secondary
education
A national merit-based scholarship program targeted on
youths from low income families and available to those
with a modest level of achievement
Rationale (cont’d):

The percentage of successive baby boom birth cohorts with
a university education did not rise significantly, which they
attribute to limitations on the supply of university “seats”

Their projections indicate that unless enrolment rates grow
more rapidly than their historical trend, university – high
school wage differentials will increase significantly in the
future
A national merit-based scholarship program targeted on
youths from low income families and available to those
with a modest level of achievement
Rationale (cont’d):

Restrictions on tuition fees that can be charged by PSE
institutions constitute an obstacle to increased supply

Although tuition fees across Canada did increase
substantially in percentage terms during the 1990s, fees
remain low relative to the cost of providing PSE of
adequate quality

Provincial governments have been reluctant to remove
restrictions on tuition fees because of concerns that doing
so would reduce access to PSE
A national merit-based scholarship program targeted on
youths from low income families and available to those
with a modest level of achievement
Rationale (cont’d):

Higher education is a potentially important tool for
promoting equality of opportunity and social mobility

The long term trend in Canada has been towards increased
participation in PSE among children from lower income
families

However, a substantial gap in participation in PSE,
especially university, continues to exist between low and
high income families
A national merit-based scholarship program targeted on
youths from low income families and available to those
with a modest level of achievement
Rationale (cont’d):

I propose a merit scholarship programs to improve access
to PSE, especially university, among children from low
income families

Evidence on the consequences of such a policy is available
from recent U.S. experience
A national merit-based scholarship program targeted on
youths from low income families and available to those
with a modest level of achievement
Rationale (cont’d):

tarting in the early 1990s a number of U.S. states have
introduced merit scholarship programs that are broadly
based and require relatively modest academic credentials

These are often targeted to students from low income
families
A national merit-based scholarship program targeted on
youths from low income families and available to those
with a modest level of achievement
Rationale (cont’d):

These programs have been shown to increase enrolment
overall, and some have reduced the large racial and ethnic
college attendance rates in the U.S.

By affecting the incentives to study, broad-based merit
scholarship programs may also raise student achievement
at the elementary and secondary school level