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EDUCATION AT A GLANCE: New OECD Report Finds That Education Pays in the United States More So Than in Most Countries

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“We must avoid the risk of a lost generation by all means. Despite strained public budgets, governments must keep up their investment to maintain quality in education, especially for those most at risk. Investment in education is not only about money, it’s also an investment in people and an investment in the future.”

An individual with a college degree earns 79 percent more than a person with only a high school education in the United States, the sixth-highest “wage premium” among the thirty-four countries in the Organisation for Economic Co-operation and Development (OECD) and significantly higher than the OECD average of 50 percent.1  This is one of the key findings from Education at a Glance 2011: OECD Indicators. The report also finds that the penalty for not completing high school is highest in the United States—someone who has not completed high school can only expect to receive 64 percent of a high school graduate’s earnings, compared to the OECD average of 77 percent.

“The cost to individuals and society of young people leaving school without a qualification keeps rising,” said OECD Secretary-General Angel Gurría. “We must avoid the risk of a lost generation by all means. Despite strained public budgets, governments must keep up their investment to maintain quality in education, especially for those most at risk. Investment in education is not only about money, it’s also an investment in people and an investment in the future.”

According to the report, the additional taxes and social contributions paid by a college-educated man during his working life is more than $190,000 in the United States—the highest among OECD nations and well above the OECD average of $91,000.2  Among college-educated women in the United States, the net gain ($90,000) is also well above the OECD average ($55,000).

The report also finds that the economic recession has disproportionally affected individuals with less education in the United States. Specifically, unemployment rates for those without a high school education increased to 15.8 percent in 2009 in the United States, more than 4 percentage points above the OECD average. Meanwhile, unemployment rates have stayed below 5 percent for college graduates, one-half of a percentage point above the OECD average. “The job market in the United States is particularly difficult for those without a college degree,” the OECD notes. “Higher-educated individuals have fared substantially better in this recession and face a job market that is no worse, on average, than in other OECD countries.”

Even with the tremendous economic and employment benefits associated with higher education in the United States, the nation continues to lag its OECD counterparts in the percentage of individuals with a college degree. Although the United States, at 41 percent, still ranks among the top five countries in the OECD in the percentage of the population with a college degree, it ranks fifteenth among thirty-four OECD countries among twenty-five- to thirty-four-year-olds. As a result, the United States is the only OCED nation where attainment levels among those just entering the labor market (twenty-five- to thirty-four-year-olds) do not exceed those about to leave the labor market (fifty-five to sixty-four-year-olds), the report finds.

The OECD’s briefing note for the United States is available at http://www.oecd.org/dataoecd/7/32/48685294.pdf. The complete report, which contains findings for every country in the OECD, is available at http://www.oecd.org/dataoecd/61/2/48631582.pdf.

 
1 The thirty-four member nations of the OECD include many of the world’s most advanced countries, as well as emerging countries, and consist of Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom, and the United States.

2 To determine the net public return, the OECD juxtaposes the benefits of attaining higher levels of education (taxes, social contributions, social transfers, and the probability of finding work by educational level) against the costs (public and private direct costs, as well as foregone earnings while in school, adjusted for the probability of finding work, and for foregone taxes, social contributions, and social transfers).

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