Lane Kenworthy, The Good Society
September 2016

Education is a core institution in affluent democratic societies. Most people are full-time students from age 6 through 18, and a growing share continue in school through their early to mid-20s. These countries spend about 5% of their GDP on primary, secondary, and college education, as figure 1 shows.

The chief aim of schooling is to enhance people’s ability to make informed choices about life goals and to effectively pursue those goals. We also hope education will help us achieve a number of other ends that are integral to a good society, such as high incomes, high employment, equal opportunity, good health, safety, stable families, happiness, political participation, trust, modest income inequality, and social inclusion. Does it succeed?

Skip to:

• How should we measure education and assess its effects?
• Education, productivity, income, and economic growth
• Education and employment
• Education and economic opportunity
• Education and health
• Education and safety
• Education and family stability
• Education and happiness
• Education and political participation
• Education and trust
• Education and income inequality
• Education and inclusion
• Education and the quality of everyday lived experience
• Summary

HOW SHOULD WE MEASURE EDUCATION AND ASSESS ITS EFFECTS?

Ideally, education enhances both cognitive and noncognitive capabilities. Cognitive skills include knowledge, reasoning, problem solving, and communication abilities. Noncognitive skills include discipline, focus, perseverance, punctuality, friendliness, and much more.

No single measure of educational attainment can capture all of this. The standard approach, therefore, is to rely on two sorts of measures. One is the amount of schooling completed, typically measured in years. Often this is reduced to four categories: 0-11 years (less than high school), 12 (high school graduate), 13-15 (some college), and 16+ (four-year college degree or more). I will use this type of measure when exploring the relationship between education and outcomes across individuals in the United States. The other is skill assessments. When examining the relationship across countries, this probably is a preferable measure, as years of schooling completed means different things in different countries. I use average adult literacy and numeracy scores as judged by the OECD’s 2013 Survey of Adult Skills assessment.¹

The best analytical strategy for identifying the impact of education would be a quasi-experimental design, whereby we observe a large number of people or countries before and after some of them experience a change in schooling.² Unfortunately, for most outcomes we don’t have this, so it’s necessary to instead compare across persons or nations at a single point in time.

EDUCATION, PRODUCTIVITY, INCOME, AND ECONOMIC GROWTH

Let’s begin with one of the most-studied consequences of education: economic productivity. In the United States and other affluent nations, people with more education tend to have higher earnings. This is mainly, though not entirely, because they are more productive. Figure 2 shows the pattern in the US, with educational attainment measured as the quantity of schooling completed.

People with similar education tend to partner, and that amplifies the effect when we look at household incomes, as in figure 3, rather than individual earnings.

The positive correlation between education and earnings could conceivably be a result of the fact that persons who would have gotten paid more anyway, because they are smarter or harder-working, tend to stay in school longer. But a long line of research confirms that education has a causal effect on earnings and income.³

If education makes individuals more productive and thereby boosts their income, it stands to reason that a better-educated population will generate faster economic growth for a country. Moreover, education should help to enhance technological progress, which is vital for growth in a modern knowledge-driven economy. Not surprisingly, education has long been seen as a key contributor to economic growth, and at early stages of economic development it probably is.⁴ For already-rich nations, however, education’s impact is much less clear. There are many ways for economies to grow, and scientists have very limited understanding of what accounts for the variation in economic growth among the rich nations in recent decades.⁵ Productivity might owe more to the organization of production than to the skills of employees, and technological progress may be a function mainly of research and development or regulation of product markets or incentives for entrepreneurship rather than of education.⁶

Figure 4 shows economic growth by education for 21 rich countries. Growth is measured over the period 1979-2014. There is a positive association, but it isn’t very strong, and adjusting for additional determinants of growth makes the association disappear entirely.⁷

EDUCATION AND EMPLOYMENT

Individuals with more education are more likely to be employed. Figure 5 shows the pattern in the United States.

To what degree does increasing education raise a country’s employment rate? Figure 6 shows employment rates as of 2015 by education. Overall there is a positive association, but among the nations with higher adult literacy (on the right-hand side of the graph) it weakens considerably. Moreover, since the late 1970s employment rates have tended to increase more in countries with less improvement in educational attainment rather than in those with more improvement. At the country level, the impact of education seems to be outweighed by that of other factors, such as macroeconomic conditions, technological change, global competition, and labor market institutions and regulations.⁸

And yet, education arguably is critical, in four respects, to a country’s ability to get to and sustain the right type of high-employment economy.⁹ First, as manufacturing jobs increasingly move to developing nations, rich-country economies have become reliant on services for new jobs. Some service jobs will inevitably be low-skill ones. But we want as many service jobs as possible to be the kinds of high-skill analytical positions that pay better and offer more opportunity for autonomy and fulfillment. A highly-educated population doesn’t guarantee a high-skill employment structure, but it certainly facilitates it.

Second, though the jury is still out on this question, labor markets may function more effectively with modest rather than stiff regulations on employers’ ability to hire and fire workers. A successfully flexible labor market requires cushions for those who are dismissed (hence the term “flexicurity”). One such cushion is generous unemployment benefits to tide people over while out of work and government services to help them get a new job. Another is workers’ adaptability, which is enhanced by a sound basic education.

Third, we want those who begin their work career in a less-skilled job to be able to move to a higher-skilled one. We want, in other words, to facilitate upward mobility over the life course (intragenerational mobility). A solid secondary education plus opportunity for retraining help with this. To be sure, they aren’t enough. Job ladders — formal structures within and across employers that provide clear routes to upward job movement — are needed. So too is individualized advice and assistance, particularly for people with cognitive, psychological, or physical disabilities. We also need sources of income support for periods of nonemployment. But education, conceived broadly as “lifelong learning,” is fundamental.

Fourth, employment shouldn’t come at the expense of children’s well-being. If most working-age adults are in the labor force, someone must look after the kids. One way to solve this problem — the American way, up to now — is to leave child care largely unregulated. This allows for a proliferation of private child care providers, from large firms with centers all over the country to the neighbor down the street. Because competition is intense and quality is unregulated, the price is low, so even adults working in relatively low-paying jobs can afford some version of care for their preschool-age children. But some of this care, perhaps much of it, is considerably less than ideal from the perspective of child development. A more effective approach is to make child care part of the schooling system. In Denmark and Sweden, for instance, preschool teachers are required to have similar training and qualifications as elementary school teachers, and their pay is similar.

EDUCATION AND ECONOMIC OPPORTUNITY

No society can fully equalize opportunity, as that would require genetic engineering, direct interference in families, and extensive redistribution of income and assets. But we do want everyone to reach adulthood with ample capacity for success.¹⁰ To achieve this, we rely heavily on schools. Schooling enhances cognitive and noncognitive skills, facilitates adaptation to labor market shifts, and contributes to network ties through which people can better pursue their economic and social goals. In doing so, schools help to offset inequalities caused by genes, family circumstances, and neighborhoods.¹¹

The standard indicator of equality of opportunity is relative intergenerational income mobility, which is a measure of the degree to which people’s incomes are uncorrelated with those of their parents.¹² Figure 7 suggests that education increases intergenerational mobility. The mobility data are available for only 11 countries, and recall that the education data are measured at the end of the period rather than the beginning, so we shouldn’t put too much stock in this association. Still, it is encouraging.¹³

We have some over-time evidence as well. Expansion of education and changes in the structure of schooling — for instance, a shift toward later tracking — appear to have contributed to increases in intergenerational mobility in Sweden and Finland.¹⁴ On the other hand, in the United States and United Kingdom mobility seems to have stagnated and possibly decreased in recent decades despite educational advance.¹⁵ That doesn’t mean education makes no contribution, but it does suggest that whatever contribution it makes hasn’t been powerful enough to outweigh developments pushing in the other direction.

EDUCATION AND HEALTH

People with more education tend to have better health outcomes. Figure 8 shows that in the United States, those with some college or a college degree tend to live a good bit longer than those with with a high school degree or less. The same holds for other health outcomes and for people’s subjective perception of their health.¹⁶ This isn’t surprising. Education tends to increase income (figure 3), and that allows purchase of better health insurance, health care, food, exercise, and safety. And education improves health behavior, by encouraging people to acquire more information and to seek the care of medical experts, by surrounding them with friends and family who can offer more informed advice, and by enabling them to better understand and follow physicians’ recommendations and treatments.¹⁷

When we compare across countries, however, we find no association between education and health indicators such as life expectancy, as shown in figure 9. This suggests that other country-level factors play a stronger role than the educational composition of the population in determining aggregate health outcomes. For instance, the health benefits of the “Mediterranean” diet prominent in Spain and Italy may offset the comparatively low average literacy level in these countries.

EDUCATION AND SAFETY

For individuals, education can enhance safety by improving knowledge and by increasing income, which allows greater choice about where to live. One way to assess safety is via a public opinion survey question such as that featured in figure 10. It asks whether respondents are afraid to walk alone at night in any area within a mile of where they live. The share responding “not afraid” is higher among those with more education.

Does education improve safety for society as a whole? Lots of research suggests that education reduces violent crime, with the difference in crime particularly pronounced between those who have completed high school and those who haven’t.¹⁸ Yet figure 11 tells us that among rich nations there is no association between homicide rates and country literacy scores.

EDUCATION AND FAMILY STABILITY

In the United States, education is strongly correlated with family stability. As figure 12 shows, adults with children are more likely to stay together the more education they have. Better-educated women now place considerable emphasis on a career, so they delay not only marriage but also childbearing. This gives them time to get established and to find the right partner. As a result, among Americans with a college degree or better the decline in family stability has been minimal.¹⁹

When we look across the rich countries, however, the tendency of education to boost family stability is outweighed by cultural and religious traditions. Despite low adult literacy, Catholic traditional-family nations such as Ireland, Italy, and Spain continue to have very high levels of family stability, as figure 13 shows.

EDUCATION AND HAPPINESS

Figures 14 and 15 suggest a positive association between education and happiness, across individuals in the United States and across the world’s rich countries. This association is largely a function of income: education increases income, and income increases happiness.²⁰

EDUCATION AND POLITICAL PARTICIPATION

In affluent democratic countries, people with more schooling are much more likely to vote.²¹ The effect is quite strong in the United States, as figure 16 shows. Figure 17 shows that we also see this positive association when we look across countries, though it is somewhat muted by the unexpectedly high voter turnout rates in Italy and Spain.

EDUCATION AND TRUST

Individuals with more education are more likely to perceive their society to be predominantly middle-class, and they tend to be more active in various types of voluntary associations. Both contribute to greater trust.²² The standard measure of trust is a public opinion survey question asking whether “most people can be trusted” or “you can’t be too careful in life.” Figure 18 shows the very strong association between schooling and trust in the United States. Figure 19 shows that the positive association also holds across countries: those with higher adult literacy tend to have higher levels of trust.

EDUCATION AND INCOME INEQUALITY

As we saw earlier, if we compare across individuals in a society, we find that those with more education tend to earn more (figure 2). This suggests that increasing the education of others might reduce income inequality.²³

Unfortunately, while equalizing schooling almost certainly would help to reduce income inequality, its impact would likely be swamped by other factors. Inequality in individuals’ earnings is influenced by differences in cognitive abilities and noncognitive traits produced by genetics, parents, peers, neighborhoods, and so on, by structural features of the economy such as the intensity of product market competition, immigration, trade, and the sectoral structure of employment, and by institutional factors such as wage-setting arrangements, corporate governance practices, winner-take-all markets, and government regulation. Further weakening education’s impact is the fact that individuals’ earnings are pooled in households. Household size and composition therefore play an important role, as does the distribution of employment across households. Last, but not least, there is government redistribution via taxes and transfers.²⁴

The most prominent inequality trend in rich nations in recent decades has been the separation between the top 1% and the rest of the population, and this is unlikely to owe much to education. The superrich include CEOs, financial analysts and traders, entertainers and athletes, entrepreneurs, and people who provide legal and other high-end services to them. The difference in educational attainment between these people and the upper-middle class (the rest of the top 20%) tends to be minimal at best.

Figure 20 shows income inequality by education across countries, with inequality measured as the share of income going to the top 1%. The association is negative; countries with higher adult literacy tend to have lower income inequality. But the relationship is weak, suggesting little if any true impact of education. And when we look at developments over time, we see that while educational attainment has risen in most of these countries since the 1970s, income inequality in many of them has increased rather than decreased.²⁵

EDUCATION AND INCLUSION

We sometimes think of inclusion in terms of incomes, living standards, or access to employment, but the group most at risk of exclusion in contemporary rich nations is likely to be immigrants. Though not the only route to economic success, schooling is a key source of economic opportunity and cultural assimilation for many immigrants, particularly second-generation ones. If rich countries are to continue to maintain a reasonably generous approach to inward migration, as they should, education probably will be critical to their success in furthering community and social harmony.

Successful incorporation of immigrants has repercussions for other key institutions in rich nations, most notably social policy. A large and visible immigrant minority perceived as relying disproportionately on generous social benefits poses perhaps a bigger challenge to sustained welfare state generosity than do tax competition, capital mobility, or neoliberal ideology.²⁶

EDUCATION AND THE QUALITY OF EVERYDAY LIVED EXPERIENCE

Education’s value isn’t solely instrumental. We spend a good deal of our time from age six (or one) to twenty-one in schools. In a rich society, those schools ought to be safe, orderly, comfortable, attractive, intellectually stimulating places.

SUMMARY

Education typically is at or near the top of policy makers’ concerns, and for good reason. When we compare across individuals, those with more education tend to fare better on virtually every outcome we care about. Comparing across countries suggests that while boosting educational attainment probably won’t yield aggregate improvements on all of these outcomes, it very likely will help with some. Education isn’t a panacea, but it matters a great deal. It is perhaps the single most important thing we can do in pursuit of the good society.