| Practice area: | Education and Labour Markets |
|---|---|
| Client: | Department for Education |
| Published: | 23 February, 2023 |
| Keywords: | economics of education further education higher education quantitative analysis 2023 Labour Market Economics Public Policy |
London Economics were commissioned by the Department for Education to investigate the contribution of educational attainment to UK productivity growth.
Growth in UK labour productivity has slowed in recent years. We analyse this productivity puzzle by estimating the impact of changes in educational attainment on UK labour productivity (Gross Value Added (GVA) per hour worked) from 2001 to 2019.
Headline findings included
- UK labour productivity growth has continued to fall across the past two decades. GVA per hour worked grew by an average of 2.0% per year for 2001-2007, then 0.6% per year for 2008-2013, and finally 0.3% per year for 2014-2019.
- There has been a considerable increase in the share of hours worked by those with higher level educational qualifications. The proportion of hours worked by those with a first-degree qualification or above increased from 23% (2001-2007) to 35% (2014-2019).
- This has been driven by the share of those employed who have higher-level educational qualifications increasing rather than by changes to weekly hours worked.
- According to the growth accounting methodology, the contribution of changes to educational attainment has remained fairly constant across time. Labour composition contribution to annual labour productivity growth was estimated to be 0.3 percentage points in 2001-2007, 0.4 percentage points in 2008-2013, and 0.3 percentage points in 2014-2019.
- However, results from the econometric methodology suggest that there was a significant decrease in the impact of educational attainment
after 2008.
The full report provides more detailed analysis (by region and by sector), as well as more information about the methodology, and has been published by the Department for Education here