September 15, 2014

International comparisons in higher education: the OECD’s Education at a Glance

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OECD (2010) Education at a Glance 2010 Paris: OECD

The OECD has brought out its annual ‘Education at a Glance Report’, which provides data from 39 higher education systems (31 in the OECD – the most economically advanced countries; the 4 BRIC countries, and Estonia, Slovenia, Israel and Indonesia). All figures refer to 2008.

Although the methodology needs careful examination (look particularly at the definitions in the main report), it’s always fun to look at comparisons between countries on key higher education indicators, to see if ‘your’ country is doing ‘better’ or ‘worse’ than others (however you define better or worse). However, besides the cross-country comparisons, the OECD comes to some interesting general conclusions that represent a challenge for higher education institutions, so I’ll start with some of the main conclusions from the foreword by Angel Gurrià, OECD Secretary-General:

This year’s edition of Education at a Glance shows that public resources invested in education ultimately pay off in even greater tax revenues. On average across OECD countries, a man with a tertiary level of education will generate an additional USD 119 000 in income taxes and social contributions over his working life compared to someone with just an upper secondary level of education. Even after subtracting the public revenue that has financed the degree, an average of USD 86 000 remain, almost three times the amount of public investment per student in tertiary education. The returns to society are even larger because many benefits of education are not directly reflected in tax income.

In 2007, close to 75% of people across the OECD with a tertiary degree found a skilled job in their first years in the labour market, a percentage similar to that in 2003. The fact that labour markets have absorbed the significant increase in individuals with tertiary education shows how rapidly labour market demand for skilled labour is changing. As global competition for jobs moves up the education ladder, it will be crucial for countries to develop policies that encourage the acquisition and efficient use of these competencies to retain both high value jobs and highly educated labour….

Education at a Glance shows that, across the OECD, more than 40% of the adult population already participate in formal and/or non-formal education in a given year. However, this varies significantly not just between countries but also across education and age groups…

…there is a strong need for effectiveness and efficiency in the education systems’ response to the skill needs of a fast-changing labour market, and countries must find new ways to generate greater value for money from educational investments. It is worrying that the significant increase in spending per student over the past decade has, in many countries, not been matched with improvements in the quality of learning outcomes.

The future will measure the success of education systems no longer by how much countries spend on education or by how many individuals complete a degree, but by the educational outcomes achieved and by their impact on economic and social progress. Citizens and employers now expect education systems to:
•    be responsive by ensuring that education and training providers adapt efficiently to changing demand;
•    deliver quality and efficiency in learning provision so that the right skills are acquired at the right time, at the right place and in the most effective mode;
•    provide the flexibility needed to allow people to study and train in what they want, when they want and how they want;
•    reduce barriers to entry such as institutional rigidities, up-front fees and age restrictions and ensure a sufficient variety of entry and re-entry pathways; and,
•    last but not least, to develop efficient and sustainable approaches to the financing of learning with a rational basis for who should pay for what, when, where and how much.

Highest proportion of populations with some form of tertiary education in the 25-34 year old age category

And the winner is: (South) Korea (60% of 25-34 year olds), closely followed by Canada, Russia and Japan. This represents a remarkable development over the last 30 years for Korea, as it has one of the lowest proportions of people between 55-64 years of age with tertiary education. The United States ranks 12th on this indicator at just over 40% of 25-34 year olds (even though it spends by far the most on tertiary education as a proportion of GDP). Brazil ranks last, at 11%.

Graph comparing different countries % of population with degrees

by David Longanecker, WICHE, from OECD data for 2008

Drop-out

This measures the proportion of students who start a tertiary education program and do not complete. The USA has the dubious distinction of having the highest non-completion rate, at over 50%, followed by New Zealand, Sweden and Mexico. Korea and Japan have the lowest rates (10% and 15%). No data for Canada are available. However, the report also adds:

Non-completion of a degree does not mean that the skills and competences acquired will be lost and not valued by the labour market. This is particularly the case in countries where one year of study can provide students attractive opportunities for employment on the labour market. This helps explain students’ decision to leave the education system before graduating. Similarly, some students who enter tertiary education (generally mature students) do not have the intention of graduating from a specific programme, but instead aim to study an individual subject or follow only a few courses as part of their lifelong learning – this is the case in New Zealand and in Sweden.

There is no observable relationship between the charging of tuition fees and completion rates. Denmark, which has no tuition fees, has one of the highest completion rates, for instance.

Who spends the most on higher education?

The OECD measures expenditure on tertiary education (including two year colleges) as a percentage of GDP (gross domestic product, a measure of the overall ‘wealth’ of a country). The USA wins this hands down, with approximately 3 per cent of GDP, followed by Canada, at 2.5%, Korea (2.4%) and Chile (2%). Bottom of the pack are Brazil, Italy and Slovakia (between 0.5% to 1%). However, this is total expenditure, including tuition fees.

There is a huge difference between countries in the proportion of the higher education expenditure that comes from private sources, primarily tuition fees. In Chile tuition fees account for 80% of all expenditure. In the USA, Korea and Japan it is around 66% and in Canada around 42%. Switzerland, Brazil, Hungary and the Scandinavian countries have almost no fees.

The countries with the highest proportion of GDP spent on higher education from public sources (taxes, primarily) are Canada, Denmark, Finland and Sweden (around 1.5%). Countries with the lowest proportion of GDP from public sources are Chile (0.25%), Korea (0.5%), Britain and Italy (0.6%). These figures are from 2007, and Britain since then has announced a massive reduction in public spending in higher education, which will depress further its placing in the OECD rankings for public expenditure on higher education.

Conclusions

The closer one reads the report, the more cautious one needs to be in drawing conclusions. There are wide variations in the organization and structure of higher education across these countries, data on some key indicators are missing for some countries, and we all know how reliable government statistics can be. Thus comparisons are invidious. I have also focused on only a few sections of this report.

However, one can’t help be struck by the gap between expenditure and output in the USA. In particular, high tuition fees, relatively modest enrolment figures as a proportion of the population, and low completion rates all suggest that the USA has some major systemic problems to deal with. Also, one wonders how long the UK, which traditionally has a very high international reputation in higher education, will be able to maintain this given the increasingly low level of investment proportionate to other OECD countries. Lastly, as well as the USA, Canada, Korea, and Chile are all heavily investing in higher education. It will be interesting to see if this pays off as well as the OECD thinks it will.

Comments

  1. Some very interesting data points and correlations. But what boggles my mind is how higher education tuitions in the US keep going up so much faster than inflation. There can’t be any linkage between tuition rises and income or tax revenue increases, can there. I assume it is just supply and demand, and parents can’t say no to giving their children the best long-term chances.

  2. Hi, Mark

    There’s recent research that shows that increases in tuition fees in public universities in the USA are almost in line with reductions in funding from state governments (McPherson and Shulenburger, 2010). However, because so much of state funding goes into maintenance and infrastructure, the extra tuition has not gone into maintaining or increasing instructors or faculty, but into administration and overheads.

    Maybe universities could manage this changing context better (for instance by moving more to e-learning and spending less on buildings), but the USA has one of the lowest tax revenues per capita in the OECD. If citizens won’t pay taxes, then public services are likely to suffer.

    Reference
    McPherson, P. and Shulenburger, D. (2010) Understanding the cost of public higher education Planning for Higher Education Vol. 38, No. 3, pp. 15-24

  3. It does not follow, as the OECD Report suggests, that higher levels of education will result in greater levels of individual tax contribution:

    “a man with a tertiary level of education will generate an additional USD 119 000 in income taxes and social contributions over his working life compared to someone with just an upper secondary level of education.”

    There are a limited number of higher-paying professions, and providing higher education to every individual does not mean each will have access to a higher paying profession; the supply is limited. This kind of thinking is responsible for the credential inflation we’ve been struggling with since the 50s. It won’t be long before retail outlets are demanding that their employees have undergraduate degrees.

    Arguing for higher education for a better-informed citizenship is one thing, arguing for higher education for a guarantee of a better paying job is quite another.

  4. Wally Watkins says:

    Hi Tony

    Just noticed that Canada is simply not represented in the “completion” tables of the OECD “Education at a glance 2010″

    And you observe there are no data in this respect.

    Can you suggest why this is so, and from where we may obtain such data?

    Thanks

    W

  5. At least it is true for Korea.
    They invested highly to higher education and they are collecting the fruits now.
    I started business with Korea in 1971 while they were so poor. Very few peoplencan speak English. They rtrieed to sell the Hyundai cars to us to Turkey we said ” ooo no ”
    See them now . They are almost first in electronics as well as car manufacturing and shipyards.
    But it sad to say that they did not have democracy, plus they had the suport of USA all the way .

    Chile is interesting . I have no idea. They were under Allende administration for an while.
    From all these I conclude that ” political situations also effect the education ouıtcome a lot ”

    Yes we have to be cautious for statistics all the time .

  6. I agree with Business Intellengence Trainer
    It is a matter of demand and supply.
    More people want to go to university for a degree to earn more money.
    Not to be a better citizen as DEREK says .

    In fact we should divide higher education to two.
    Research universities ( Have enough sources from firms and government research )
    Teaching universities for career ( they are colleges in USA ) They need funds.

    For teaching universities the vision is ready : ONLINE
    But in the USA there is such a good demand that even ONLINE is expensive, look up Drexel, Pennstate I am ashamed to see their tuitions.

    So the solution has been suggested by Obama 8 months ago at Carnegie Mellon. SHARE

    Existing ONLINE Content owners of the universities should share their contents with all universities in the USA and the world. They should charge $ only 10 per course. Carnegie Mellon is doing it in only Pennsylvania .
    Every sharing college would assign their own online instructor to any course they would get from other universities. The only cost is instructor cost which is the 25 % of the regular salary per course. They can increase their capacity if they get 50 % of the courses as online courses. That is 5,000 students college can become very easily 10,000 students without any investment for brick and mortars .

    If SHARING is done in great scale all problems of the USA and world would be solved.
    Even you can share MIT, Harvard, Yale etc from academicearth or my website tomorrow. Just click
    http://www.globalonlineuniversitiesconsortium.org

    mgozaydin@hotmail.com

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