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Education determines wealth creation

The Lisbon Council Series on Human Capital University System Rankings Peer Ederer, PhD Director, human capital center, The Lisbon Council Astana, 15th June 2009. Education determines wealth creation. USA 1960. USA 1940. Net Secondary School Enrolment Rate in 2000 20 40 60 80 100.

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Education determines wealth creation

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  1. The Lisbon Council Series onHuman CapitalUniversity System RankingsPeer Ederer, PhDDirector, human capital center, The Lisbon CouncilAstana, 15th June 2009

  2. Education determines wealth creation USA 1960 USA 1940 Net Secondary School Enrolment Rate in 2000 20 40 60 80 100 Distribution of countries in 2000 USA 1920 USA 1900 403 1097 2981 8103 22026 59874 Real ppp 2000$ GDP/capita log scale Source: The Race between education and technology, Goldin and Katz 2008

  3. Education determines wealth creation – but how? Average annual percentage change labor productivity education expansion 1915 – 1940 2.45 0.50 1940 – 1960 2.92 0.49 1960 – 1980 2.41 0.59 1980 – 2005 2.18 0.37 1915 – 2005 2.47 0.48 Something is missing ! Source: The Race between education and technology, Goldin and Katz 2008

  4. standard job 500,000 400,000 300,000 200,000 100,000 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 18 300,000 200,000 100,000 Introducing: Learning on the job in human capital accounting Parent Schooling Tertiary academic job Euro Source: The Human Capital Center Lisbon Council and Deutschland Denken! eV

  5. Primary indicators for system relevance: • Tertiary participation rates • -> the higher, the better 2. Access threshold -> the lower, the better • Effectiveness for the labor market • -> the more salary, the better Secondary indicators for system relevance: 4. Attractiveness for foreign talent -> the more foreigners, the better • Quartary education • -> providing lifelong learning institutionality Implication for university systems: provide better education to more students for better jobs academic job Parent Schooling Tertiary 6. Adaptiveness -> the ability to change Source: The Human Capital Center Lisbon Council and Deutschland Denken! eV

  6. Indicator #1: Tertiary participation How large is the risk of overeducation ? Tertiary graduates as a percentage of typical age group Finland UK Sweden OECD USA Germany Source: OECD, Education at a glance 2007; Deutschland Denken!

  7. Indicator #1: Tertiary participation Wage premia are stable to increasing despite expansion Evolution of gross wage premium for selected countries United States France Irland Italy Denmark Netherlands Germany Belgium Source: Hubert Strauss; Christine de la Maissoneuve

  8. Indicator #2: Access threshold The quality of an education is measured by the skills that were imparted between entry and graduation Pretertiary skill level required for graduation success, as measured by PISA 2003 math scores Source: Deutschland Denken! Analysis based on OECD PISA scores

  9. Indicator #3: Education effectiveness Differences in gross wage premium Gross wage premium on tertiary education 63% 60% 60% 51% 50% 50% 46% 45% 43% 39% 39% 38% 37% 40% 37% 36% 35% 30% 30% 27% 22% 20% 10% 0% UK Italy USA Spain Austria Poland Ireland France Finland Sweden Portugal Hungary Australia Germany Denmark Switzerland Netherlands Source: Hubert Strauss; Christine de la Maissoneuve

  10. Indicator #3: Education effectiveness The relationship between collective bargaining and wage premia 100% 80% 60% Wage Premia 40% 20% 0% 0% 20% 40% 60% 80% 100% Collective Bargaining Coverage Wage premium needs to be adjusted for collective bargaining coverage in countries Source: Barth & Lucifora 2006; OECD Employment Outlook 2003

  11. 2,9 3 2,6 2,5 2,2 2 1,7 1,6 1,4 1 0 Literature Literature Patent Suppliers Scientific Consumers Customers and Technical Competitors Conferences Research Universities and Public Workshops and Laboratories Research quality is not relevant to university systems 1/2 Relative importance of external sources of knowledge, rated 0-5 (5 = important) by 8824 European patent holders, 2005 Source: Giuri & Mariani, 2005

  12. Research quality is not relevant to university systems 2/2 Importance of geographical and organizational proximity to inventors, rated 0-5 (5=important) by 8180 European patent holders, 2005 3 3 2 1,3 1,3 0,9 1 0 Geographically distant Geographically close Internal to the Organization Internal to the Organization External to the Organization External to the Organization Source: Giuri & Mariani, 2005

  13. For more information,and download of the 2008 University Systems Ranking:www.lisboncouncil.netThank you !peer.ederer@lisboncouncil.net

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