Employment and Productivity Benefits of Enhanced Educational Outcomes: A Preliminary Modelling Approach

The aims of the study were to develop methods to estimate the impact of better secondary schooling in developing countries on the employment and productivity of adolescents and provide initial results through application to 72 developing countries.

We model two effects here: the impact of longer and better quality secondary schooling on productivity in given job types and of increased school completion rates on the type of job obtained. Model parameter values are derived from the existing literature, supplemented by new empirical work. The impact of better schooling is studied, for each country, through the effects on the 20-24 years cohort, with the employment paths of successive cohorts traced through to 2030.

For the education scenario studied-an increase of 65% in secondary school completions and of 90% in school quality by 2030-strong employment outcomes are obtained. Productivity per employee in the 20-24 years cohort is up by 37% by 2030, and employment by 3%. Nearly half of the productivity gain comes from better school quality, with 30% from additional schooling and 20% from shifts in employment structure. Productivity gains are much stronger in low-income countries than in upper middle-income countries.

The model shows strong effects of better education through the various channels, especially for low-income countries, indicating the need for increased investment in secondary schooling, especially in school quality. Further work is required on the quality of education and on employment structure to enable derivation of parameter estimates with a stronger evidence base.