Did Higher Technical Education Pay?

Despite the general agreement about the importance for economic growth of higher education, and in particular higher technical education, facts that prove or disprove this notion are not easily available. One approach would be to disaggregate national accounts and look at sectoral data for education. However, such data are seldom reported in the official statistics. Moreover, in national accounts, education, like other non-marketed services, suffers from the non-existence of price and output estimates. Labour input — that is, teachers and other personnel — is therefore taken as a proxy for the contribution of education to GDP. In the most recent system for national accounts (SNA 1993, pp. 402–3) other measures are also discussed, but for historical periods national accounts rely solely on input data. For the study of change over time that poses a problem, since current values must be deflated into constant prices. And the labour input is deflated with an index of the relevant earnings which means that the estimated ‘output’ actually equals the quantity of inputs. In other words, nothing is, by definition, left for productivity change. The contribution of the education sector to economic growth thus equals its increase of employment, at the value of labour in the chosen base year. The sources of the part of growth contained in the ‘residual’, that is the total factor productivity, should thus be sought somewhere other than in education.