Nova workboard

a blog from young economists at Nova SBE

Smoothing concerns over the investment in upper secondary compulsory schooling

In Portugal, 2009, the compulsory schooling increased from lower secondary, or 15 years old, to upper secondary education (scientific-humanistic, technological, artistic and vocational courses), or 18 years old. Portuguese citizens were, and some of them still are, concerned about this policy: is it desirable to force teenagers, who want to dropout school, to study, against their will?

I would say yes. Nevertheless, economists often perceive education as a driver to economic growth, due to the increase of human capital in the labour force (increasing innovative capacity and labour productivity). But, empirically, what does data show us?

According to the OECD 2012 Indicators, people who lack upper secondary education face severe earnings penalty in the labour market. It was estimated that a person without upper secondary education could expect to earn 23% less than a person with this level of education, on average across OECD countries. In addition, this report suggests that Portugal was one of the OECD countries in which people who did not attain upper secondary education were particularly disadvantaged (i.e. womens’ without an upper secondary education earnings represented less than 70% of those with it).

Furthermore, other researches found that more education may also be an investment in public health. “Returns to education: the causal effects of education on earnings, health and smoking”, by the Institute for the Study of Labor, suggests that there are substantial direct effects of graduating high school, and that schooling has strong causal effects on earnings, health, and healthy behaviours.

Is it clear that people should attain upper secondary education? I would say so. But some Portuguese disagree, arguing that other European Union countries have higher employment rates and wages with least compulsory schooling, so that compulsory schooling and the economy behaviour should not be strongly related. But is this argument considering cultural differences between countries? No, because while other countries citizens (with compulsory schooling periods similar to the Portuguese) understood the importance of attaining upper secondary education, Portuguese did not. In 2006, three years before the measure was implemented, according to the World Development Indicators, Portugal was one of the European countries with the smallest net secondary school enrolment (83%). Even in 2012, three years after the measure was implemented, Portugal still ranked badly when compared to the OECD average percentage of people that has attained at least upper secondary education, according to an OECD country note.

We can therefore take two conclusions: (1) upper secondary education is important to the society and individual’s earnings and health, and (2) Portuguese people are not aware of this benefits when compared to other countries. This justifies the paternalistic government intervention in 2009, forcing individuals to make better choices for their future.

Nonetheless, even though students spend more years in school, this does not imply they understand the importance of learning and enjoy the advantages that more education provides. Therefore, based on the previous arguments, educating families on the relevance of education might be the best way to increase the efficacy of this policy, and the return of the taxpayers investment.

 

Patrícia Sofia Pinto e Filipe 

Public Finance

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Author: studentnovasbe

Master student in Nova Sbe

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