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The Effects of Life-long Learning on Earnings and Employment. Richard Dorsett, Silvia Lui and Martin Weale. The Role of Life-long Learning. Educational attainment is strongly dependent on socio-economic background.

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the effects of life long learning on earnings and employment

The Effects of Life-long Learning on Earnings and Employment

Richard Dorsett, Silvia Lui and Martin Weale

the role of life long learning
The Role of Life-long Learning
  • Educational attainment is strongly dependent on socio-economic background.
  • It is unlikely that capacity to benefit from education is as dependent on background as is attainment
  • It follows that there is plenty of scope for making up for lost time
the spread of life long learning
The Spread of Life-long Learning
  • 1994. 31% of 451,000 UK students starting undergraduate courses aged twenty-five or over.
  • 2007, 43% of 706,000 UK students A similar pattern elsewhere
    • Forty per cent of those starting university in Sweden were had left school at least five years earlier
    • Thirty-five per cent of male school leavers in the United States between 1979 and 1988 resumed their education by 1989.
  • What are the benefits of qualifications gained through life-long learning
doubts about the benefits
Doubts about the Benefits
  • Jenkins et al. (2002). Wage growth after life-long learning was not significantly faster than for those who did not do it.
  • Egerton and Parry (2001). Substantial penalties for late learners.
  • Purcell et al (2007). Case studies suggest mature graduates have difficulty finding appropriate employment.
  • Blanden et al. (2008). Little benefit for men; some for women aged thirty-five to forty-nine
a mover stayer framework
A Mover-stayer Framework
  • People have to take a wage from a stationary distribution (Movers)

OR

  • The wage rate is closely related to the wage in the previous period (Stayers)
  • Expected earnings depend on
    • i) the nature of the stationary distribution
    • ii) the speed with which people move up the ladder
    • iii) the chance of falling off
  • Contrast this with a model estimated in first differences to remove individual fixed effects in levels.
employment prospects
Employment Prospects
  • People have to be employed to have earnings.
  • Previous unemployment may damage earnings potential at least in the short run.
  • These effects need to be allowed for along with earnings dynamics.
life long learning
Life-long Learning
  • Consider qualifications acquired when age 25 or older.
  • BHPS provides information on qualification level (NVQ) from 1991 or when subject joins survey.
  • And each year on i)whether qualifications have been obtained and ii) whether educational status has been upgraded.
  • Separate effects of qualifications in each of last five years from ever acquiring qualifications.
sample structure
Sample structure
  • Consider only men aged 25-60.
  • Leave out self-employed (who may have negative earnings) and drop from sample if people become self-employed.
estimation strategy
Estimation Strategy
  • Consider covariance structure of residuals
  • Note that

for identification

estimation strategy14
Estimation Strategy
  • Apply a Cholesky decomposition to the co-variance matrix with the life-long learning equation at the top of the diagonal.
  • Estimate the life-long learning equation as an ordered probit
  • Compute the generalised residuals from this and introduce these as extra variables into the other four equations estimated as a system.
  • Include dummies for people who undertake life-long learning and those who upgrade at some time so as to distinguish the characteristics of people who study from the effects of study.
conclusions
Conclusions
  • In common with other related work, we find little benefit from life-long learning when studied with the standard fixed-effects model.
  • A richer mover-stayer model in which employment is endogenous finds that life-long learning has statistically significant effects
  • Upgrading raises the long-term employment rate by around 5% and also incurs wage benefits for stayers after one year
slide21

Acquisition of qualifications, with or without upgrading raises earnings of movers permanently by around 6%

  • The effects point to a return of around 4% for qualifications without upgrading and from 12-22% with upgrading.
  • The effects of upgrading are much enhanced by the effect on employment