Productivity and Higher Education

by

Gwilym Croucher

• LAST REVIEWED: 25 September 2019
• LAST MODIFIED: 25 September 2019
• DOI: 10.1093/obo/9780199756810-0227

Introduction

The study of productivity in higher education, and its contribution to local and global economies, has become an increasingly important area of focus for scholars, as well as for those who fund and administer higher education institutions. The reason for greater attention in part comes from the increasing scale of postsecondary education in most countries. Both developed and developing countries have grown their provision of higher education in the last seventy years, and along with this, there has been an increase in per capita enrolment. This growth accelerated during the 1990s and 2000s when the proportion of the worldwide population entering higher education more than doubled. Across all countries one in three young people are now enrolled, requiring the establishment of many more universities, colleges, and other higher education institutions. Universities and colleges now demand a greater proportion of public and private resources and form a larger part of the economic life of most countries. Higher education contributes to growth and economic efficacy and, hence, the overall productivity of an economy. While few scholars dispute the productivity-augmenting power of education, and often research looks at the role of higher education alongside that of primary and secondary education, there remains much debate over the size of the contribution it makes to economic growth, economic efficiency, and, hence, to raising productivity overall. Significant questions remain as to the correlation between higher education system performance and economic growth and whether or not relationships are causal. The most prominent theory linking higher education to economic productivity has been its function in contributing to the development of human capital through the production of skilled graduates. At the same time, the capacity for universities and colleges to contribute to greater economic efficiency depends on their own productivity in educating students and undertaking research. Given the scale of higher education worldwide, how efficient and effective universities and colleges are at educating students is an important productivity question. Research by economists, management scholars, and those who study public administration provides an important entry point for readers who want to access the breadth of research examining productivity and higher education.

Economic Growth and Higher Education

The relationship between higher education and improvements in overall productivity comes primarily from the contribution to economic growth of having a more skilled workforce. Universities, colleges, and other institutions of higher education are frequently asked to justify their effect on economic outcomes, especially where they receive significant public funding. Studies have sought to quantify the economic impact of higher education locally, nationally, and transnationally, using different techniques and approaches. Bloom, et al. 2014; Brown and Heaney 1997; Campeanu, et al. 2017; Holland, et al. 2013; and Oreopoulos and Petronijevic 2013 provide conceptual discussions on the economic impact of higher education. Bowen 2018 and Dickson and Harmon 2011 offer useful discussions on returns to education.

• Bloom, David E., David Canning, Kevin J. Chan, and Dara Lee Luca. 2014. Higher education and economic growth in Africa. International Journal of African Higher Education 1.1: 22–57.

  DOI: 10.6017/ijahe.v1i1.5643

  Study examining the relationship between degree attainment and economic growth in Africa, with a useful discussion on the challenge of measuring the economic impact of higher education.

• Bowen, H. 2018. Investment in learning: The individual and social value of American higher education. New York: Routledge.

  DOI: 10.4324/9781351309929

  Volume examining the gains from US higher education in multiple contexts; argues that the nonmonetary benefits are far greater, including useful discussion of nonmonetary benefits.

• Brown, K. H., and M. T. Heaney. 1997. A note on measuring the economic impact of institutions of higher education. Research in Higher Education 382:229–240.

  DOI: 10.1023/A:1024937821040

  Article surveying different approaches to measuring economic impacts, which provides commentary on the limits of examining the economic impact of universities.

• Campeanu, E., D. Dumitrescu, I. Costica, and I. Boitan. 2017. The impact of higher education funding on socio-economic variables: Evidence from EU countries. Journal of Economic Issues 513:748–781.

  Study examining levels of higher education funding and its impact on socioeconomic outcomes.

• Dickson, M., and C. Harmon. 2011. Economic returns to education: What we know, what we don’t know, and where we are going-some brief pointers. Economics of Education Review 306:1118–1122.

  DOI: 10.1016/j.econedurev.2011.08.003

  A summary of issues around examining economic returns to education, with some reference to higher education.

• Elliott, D. S., S. L. Levin, and J. B. Meisel. 1988. Measuring the economic-impact of institutions of higher-education. Research in Higher Education 281:17–33.

  DOI: 10.1007/BF00976857

  An article discussing design and methodological issues with research assessing the economic impact of higher education.

• European Centre for the Development of Vocational, T. 2014. Macroeconomic benefits of vocational education and training. Research Paper No 40. European Centre for the Development of Vocational Training.

  A study of six European Union countries, showing that labor productivity increases with higher rates of tertiary degree attainment.

• Holland, D., I. Liadze, C. Rienzo, and D. Wilkinson. 2013. The relationship between graduates and economic growth across countries. BIS Research Paper 110. London: National Institute of Economic and Social Research.

  A useful study examining economic growth and graduates across multiple countries, which also provides a survey of approaches.

• McMahon, W. W. 2004. The social and external benefits of education. In International Handbook on the Economics of Education. Edited by G. Johnes and J. Johnes. Cheltenham, UK: Edward Elgar.

  Article summarizing social and external benefits of education with some reference to higher education.

• OECD. 2008. Tertiary education for the knowledge society. 2 vols. Paris: OECD.

  DOI: 10.1787/9789264046535-en

  Evidence on higher education’s benefits to society and how it drives economic performance.

• Oreopoulos, P., and U. Petronijevic. 2013. Making college worth it: A review of the returns to higher education. Future of Children 231:41–65.

  DOI: 10.1353/foc.2013.0001

  Article reviewing the literature on the returns to higher education with the aim of determining who benefits from college.

• Peracchi, F. 2006. Educational wage premia and the distribution of earnings: An international perspective. In Handbook of the economics of education. Vol. 1. Edited by E. Hanushek and F. Welch. Amsterdam: Elsevier.

  A review on what is known about the contribution of differences in relative wages across schooling levels to the degree of variability, between countries and over time.