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Transcript of Www.skope.ox.ac.uk Education, social mobility and earning inequality: towards a new model Craig...
www.skope.ox.ac.uk
Education, social mobility and earning inequality: towards a
new model Craig Holmes, Oxford University
“Social mobility: what has been said and what hasn’t?” ESRC Festival of Social Science, November
6th 2012
www.skope.ox.ac.uk
Introduction
• The creation of a highly educated workforce has long been seen as the key to improving social mobility and lowering inequality– “Education goes to the heart of all we stand for...to make Britain a
fairer and more equal society” Tony Blair, speech to the Fabian Society, 2004
– “As a result of low skills, Britain risks increasing inequality...skills are increasingly the key lever” Leitch Review of Skills final report, 2006
– “Education is critical to our hopes of a fairer society” – Nick Clegg, speech to the Sutton Trust, 2012
– “Education is the silver bullet. Education is everything” – Sam Seabourn, ‘The West Wing’, 1999
www.skope.ox.ac.uk
Policy models
• New Labour:
“We must transform...aspirations...through helping people get the skills they need for better jobs...only in this way will we drive up social mobility, the great force for equality in dynamic market economies.” Tony Blair, speech on welfare reform, June 9th 2002
Educational attainment
Social mobility
Earnings inequality
www.skope.ox.ac.uk
Policy models
• Coalition:
“Myth 1 is that social mobility is simply a sub-set of income inequality. According to this myth, mobility will follow automatically in the wake of greater equality...[b]ut unfortunately it’s not the straightforward route to social mobility that its proponents suggest.” – Nick Clegg, speech to Sutton Trust, May 24th 2012
Educational attainment
Social mobility
Earnings inequality
www.skope.ox.ac.uk
Education and inequality
Correlation = -0.36 (p-value = 0.002)
Sources: World Bank, OECD
0.0% 2.0% 4.0% 6.0% 8.0%0.20
0.25
0.30
0.35
0.40
0.45
0.50
0.55
0.60
CAF
LAO
AZE
KAZ
PER
GEO
PAKARMJPN
SVK
NER
SLV
THA
EGY
COL
CHL
MRT
CZE
RUS
AUSITA
DEU
CIV
ESPCAN
KORSRB
MEX
PRT
LTU
CRI
POL
HUN
SVN
VNM
CHE
ARG
GBR
BRA
AUT
NLD
USA
FRA
NZLESTIRL
LVAKGZISR
FIN NORBEL SWE
ISL
DNK
MDA
Education expenditure (%GDP), 2008
Gini
, 200
8
www.skope.ox.ac.uk
Education and inequality
Correlation = -0.28 (p-value = 0.063)
Sources: World Bank, OECD
0.0% 2.0% 4.0% 6.0% 8.0%0.20
0.25
0.30
0.35
0.40
0.45
0.50
0.55
0.60
KOR CHEISL
SVK SWE
SVNDNK
NORCZE
ESTNLDJPN NZL
FIN
ESP
AUT BEL
CANAUSDEU
HUNFRA
POL
USAGBRPRT
ITAISR
Education expenditure (%GDP), 2008
Gini
, 200
8
www.skope.ox.ac.uk
Education and mobility
Correlation = -0.59 (p-value=0.003)
Sources: World Bank, Corak (2006)
2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
DNKNORFINCAN
SWENZL
DEUJPN
ESP FRA
CHEPAK USAARGITA GBR
CHL
BRA
PER
Education expenditure (%GDP), 2008
Inte
rgen
erati
onal
inco
me
elas
ticity
(tak
en fr
om C
orak
, 200
6)
www.skope.ox.ac.uk
Education and mobility
Correlation = -0.41 (p-value = 0.007)
Sources: World Bank, Blanden (2009)
2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
BGDPHL
PER
IDN
PAK
SVK
EGY
PAN
NPL
COLCHL
CZE
MYS
ITA
POLZAF
HUNSVN
VNM
CHE
GBR
BRA
ETH
NLD
USA
NZL
EST
IRL
GHA
KGZ
FINNOR
BEL SWE
DNK
Education expenditure (%GDP), 2008
Year
s of s
choo
ling
corr
elati
on (t
aken
from
Bla
nden
, 20
09)
www.skope.ox.ac.uk
Inequality and mobility
Correlation = 0.78 (p-value=0.0004)
Sources: World Bank, OECD
0.15 0.17 0.19 0.21 0.23 0.25 0.27 0.29 0.31 0.33 0.350
0.1
0.2
0.3
0.4
0.5
0.6
DNKNORFIN CAN
SWENZL
DEUJPN
ESPFRA
USAGBRITA
Gini, 1985
Inte
rgen
erati
onal
inco
me
mob
ility
(tak
en fr
om C
orak
, 20
06)
www.skope.ox.ac.uk
Education, inequality and mobility
• There is obviously correlations between these variables• The causal links are less clear
– If key causal relationship is between inequality and mobility, which then drives educational attainment, current policy is misplaced
• Each of the three elements may mediate the relationships between the other two– e.g. level of inequality in an economy may affect how expansion of
education affects mobility
• Remainder of this paper discusses some important issues and hints towards what a better model might look like
www.skope.ox.ac.uk
Education, inequality and mobility
• Human capital (supply side) view:– Earnings and employment prospects depends on education and
training– Therefore, the strength of correlations between the generation’s
educational attainment is key– Strong correlations maintain a distribution of education based on
family background, which replicates a distribution of earnings and jobs– Weak correlations lead to a distribution of education based on ability
(more efficient)– This does not necessarily, in itself, lead to falling inequality– Increased equality of outcomes result from increased equality of
educational attainment
www.skope.ox.ac.uk
Education, inequality and mobility
• Demand side view:– The supply of jobs creates a constraint on the earnings-education link– One role of education is to sort young people into these jobs (Thurow,
1975)– As under HC, strength of correlation of educational attainment would
be predicted to affect social mobility– However, increased equality of educational attainment does not lead
to increased equality of outcomes– The process of recruitment and the structure of occupations directly
affects mobility and inequality, regardless of educational attainment• May feedback into educational attainment
www.skope.ox.ac.uk
Education, inequality and mobility
• Policy to increase educational attainment at the low end may not weaken intergenerational correlation in schooling (Goldthorpe, 2012)
• Richer families can attempt to maintain the gap in education in response:– Move to expensive areas near best schools– Private tutors– Entry to Russell Group/pre-1992 universities
• Family background (social capital and networks) – Possible disincentive effects on educational attainment at low end
• Inequality education (and social mobility)
www.skope.ox.ac.uk
Towards a new model
• Expanding secondary education has coincided with rising inequality
Correlation = -0.13 (p-value = 0.239)
Source: World Bank, OECD
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
-0.10
-0.05
0.00
0.05
0.10
0.15
0.20
AUTUSA
JPN
FINDNKCAN
SWE
POL
GBRNORISR
IRL
LUX
ITANLDARG
FRA
PER
ESP DOM
NZL
MEX
CRI
TUR
Increase in enrollment rate, secondary education, 1981-2008
Chan
ge in
Gin
i, 19
85-2
008
www.skope.ox.ac.uk
Towards a new model
• Depending on sample, expansion of secondary education is correlated with smaller increases in inequality
Correlation = -0.47 (p-value = 0.003)
Source: World Bank, OECD
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
-0.06
-0.04
-0.02
0.00
0.02
0.04
0.06
0.08
0.10
AUTUSA
JPN
FIN
DNKCAN
SWE
POL
GBRNORISR
IRL
LUX
ITANLD
ARG
FRA
PER
ESP DOM
NZL
MEX
TUR
Increase in enrollment rate, secondary education, 1981-2008
Chan
ge in
Gin
i, 19
85-2
008
www.skope.ox.ac.uk
Towards a new model
• However, expansion of tertiary education is not associated with falling inequality
Correlation = 0.05 (p-value = 0.387)
Source: World Bank, OECD
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
-0.06
-0.04
-0.02
0.00
0.02
0.04
0.06
0.08
0.10
LUXHND
MEX
JPN
ISR
FRA
USA
NLD
AUT
TUR
GBR
ITA
SWE
IRL
ARGNOR
DNK
ESP
NZL
POL
FIN
Increase in enrollment rate, tertiary education, 1981-2008
Chan
ge in
Gin
i, 19
85-2
008
www.skope.ox.ac.uk
Towards a new model
• Potentially a positive correlation between HE expansion and inequality (removing Honduras, Mexico and Luxembourg)
Correlation = 0.38 (p-value = 0.017)
Source: World Bank, OECD
25.0% 30.0% 35.0% 40.0% 45.0% 50.0% 55.0% 60.0% 65.0%
-0.06
-0.04
-0.02
0.00
0.02
0.04
0.06
0.08
0.10
JPN
ISR
FRA
USA
NLD
AUT
TUR
GBR
ITA
SWE
IRL
ARGNOR
DNK
ESP
NZL
POL
FIN
Increase in enrollment rate, tertiary education, 1981-2008
Chan
ge in
Gin
i, 19
85-2
008
www.skope.ox.ac.uk
Towards a new model
• Composition effect from expansion of education increased inequality in the UK between 1987 and 2001
Source: UK Family Expenditure Survey, adapted from Holmes and Mayhew (2012)
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.000.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
Percentile of UK gross hourly earnings distribution
Chan
ge in
wag
e att
ribut
able
to in
crea
sed
educ
ation
al
attai
nmen
t, 19
87-2
001
www.skope.ox.ac.uk
Towards a new model
• Little evidence of changing patterns of wage returns that would counteract this:
Source: UK Family Expenditure Survey
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
-1.00%
-0.50%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
Percentile of UK gross hourly earnings distribution
Chan
ge in
wag
e att
ribut
able
to g
radu
ate
earn
ings
pr
emia
, 198
7-20
01
www.skope.ox.ac.uk
Towards a new model
• Institutional changes – independent of education but occuring simultaneously – also matter:
Source: UK Family Expenditure Survey
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
Percentile of UK gross hourly earnings distribution
Chan
ge in
wag
e att
ribut
able
to d
eclin
ing
unio
n m
embe
rshi
p, 1
987-
2001
www.skope.ox.ac.uk
Towards a new model
• Focus of the discussion is largely on intergenerational mobility (parents to children)
• Intragenerational mobility (throughout working life) is also important:– If low-wage work is a persistent reality, progression reduces its effects
from a lifecycle perspective– Not all educational interventions targeted at young people– Many structural or institutional changes affect those in the workforce
rather than those yet to enter – ability to move within labour market in response to these changes affects earnings and employment outcomes
www.skope.ox.ac.uk
Towards a new model• Structural change in work towards more non-routine jobs:
• Age and progression opportunities are not constant over time:
Source: Holmes and Tholen (forthcoming)
Probability of staying in routine jobs (5 year period) A-Levels and equivalent Graduates
Decline of routine jobs: 0% 10% DISP 0% 10% DISP
NCDS (1958 cohort) 95% 85% 10%*** 88% 67% 20%***
BCS (1970 cohort) 82% 78% 3%*** 62% 57% 5%***
Probability of staying in routine jobs (5 year period)
25 year old male 35 year old male
Routine experience: 5 years 5 years 15 years
NCDS 91% 96% 98%
BCS 96% 50% 61%
www.skope.ox.ac.uk
Towards a new model
• Internal labour markets and recruitment practices create:– additional demand side barriers to mobility – increase earnings inequality at the top end
• The signalling role of education becomes increasingly important here:– Skills are specific to firms and require further training – and career ladders within firms– Linked to the issue of ‘talent’ and the ways top firms recruit
www.skope.ox.ac.uk
Towards a new model?
Educational attainment
Social mobility (inter- and intra-)
Earnings inequality
Everything else?
www.skope.ox.ac.uk
Contact Details
Craig HolmesESRC Centre on Skills, Knowledge and Organisational
Performance (SKOPE), Department of Education,
Norham Gardens,Oxford
Email: [email protected]