There is a positive association between study
abroad and graduates’ job prospects, though it is unclear if the link is
In recent decades, the number of university
students worldwide who have received some part of their education abroad has
been rising rapidly. Despite the popularity of international student
exchange programs, however, debate continues over what students actually
gain from this experience. A major advantage claimed for study abroad
programs is that they can enhance employability by providing graduates with
the skills and experience employers look for. These programs are also
expected to increase the probability that graduates will work abroad, and so
may especially benefit students willing to pursue an international career.
However, most of the evidence is qualitative and based on small samples.
Public education tends to crowd out parents’
time and money, but careful policy design may mitigate this
Many countries around the world are making
substantial and increasing public investments in children by providing
resources for schooling from early years through to adolescence. Recent
research has looked at how parents respond to children’s schooling
opportunities, highlighting that public inputs can alternatively encourage
or crowd out parental inputs. Most evidence finds that parents reduce their
own efforts as schooling improves, dampening the efficiency of government
expenditure. Policymakers may thus want to focus government provision on
schooling inputs that are less easily substituted.
Do structural reforms or educational expansion
drive higher employment and participation rates?
Employment and labor force participation (LFP)
rates have increased throughout Europe since the 1990s, with little
interruption from the Great Recession. While many credit labor market
reforms for this progress, ongoing educational expansion might actually be
more important. This implies that the overall employment rate of an economy
can change if the share of the population with tertiary education increases,
even in the absence of any labor market reforms or effects of the business
cycle. Taking this compositional effect into account makes it possible to
disentangle the impact of reforms.
Better information on university quality may
reduce underemployment and overeducation in developing countries
As the number of secondary school graduates
rises, many developing countries expand the supply of public and private
universities or face pressure to do so. However, several factors point to
the need for caution, including weak job markets, low-quality university
programs, and job–education mismatches. More university graduates in this
context could exacerbate unemployment, underemployment, and overeducation of
professionals. Whether governments should regulate the quantity or quality
of university programs, however, depends on the specific combination of
factors in each country.
Postponing school tracking can increase social
mobility without significant adverse effects on educational achievement
The goal of school tracking (assigning students
to different types of school by ability) is to increase educational
efficiency by creating more homogeneous groups of students that are easier
to teach. However, there are concerns that, if begun too early in the
schooling process, tracking may improve educational attainment at the cost
of reduced intergenerational social mobility. Recent empirical evidence
finds no evidence of an efficiency–equality trade-off when tracking is
Education benefits individuals, but the societal benefits are
likely even greater
Formal schooling increases earnings and provides other
individual benefits. However, societal benefits of education may exceed individual benefits.
Research finds that higher average education levels in an area are correlated with higher
earnings, even for local residents with minimal education. Science, technology, engineering,
and mathematics (STEM) graduates appear to generate especially strong external effects, due to
their role in stimulating innovation and economic growth. Several strategies to test for
causality find human capital externalities do exist.
Cognitive skills are more relevant in explaining earnings,
socio-emotional skills in determining labor supply and schooling
Common proxies, such as years of education, have been shown to
be ineffective at capturing cross-country differences in skills acquisition, as well as the
role they play in the labor market. A large body of research shows that direct measures of
skills, in particular cognitive and socio-emotional ones, provide more adequate estimations of
individuals’ differences in potential productive capacity than the quantity of education they
receive. Evidence shows that cognitive skills in particular are quite relevant to explain
wages, while socio-emotional skills are more associated with labor force and education
This is a revision, version 2, revising author.
The role of social interactions in modifying individual behavior is central to many fields of social science. In education, one essential aspect is that “good” peers can potentially improve students’ academic achievement, career choices, or labor market outcomes later in life. Indeed, evidence suggests that good peers are important in raising student attainment, both in compulsory schooling and university. Interventions that change the ability group composition in ways that improve student educational outcomes without exacerbating inequality therefore offer a promising basis for education policies.
External school leaving exams raise student
achievement and improve how grades are understood in the labor market
Reaching the policy goal of improving student
achievement by adding resources to the school system has often proven
elusive. By contrast, ample evidence indicates that central exit exams
constitute an important feature of a school system’s institutional
framework, which can hold students, teachers, schools, and administrators
accountable for student outcomes. While critics point to issues such as
teaching test-only skills, which may leave students ill-prepared for the
real world, the evidence does not bear this out. Overall, central exams are
related to better student achievement, favorable labor market outcomes, and
higher economic growth.
Labor force composition is critical for
understanding employment informality in developing countries
Developing countries have long been struggling
to fight informality, focusing on instruments such as labor legislation
enforcement, temporary contracts, and changes in taxes imposed on small
firms. However, improvements in the labor force’s schooling and skill level
may be more effective in reducing informality in the long term.
Higher-skilled workers are typically employed by larger firms that use more
capital, and that are more likely to be formal. Additionally, when skilled
and unskilled workers are complementary in production, unskilled workers’
wages tend to increase, adding yet another force toward reducing