Kudos to the Canadian Education System

Canadian federal and provincial governments can take a bow. The provincial education systems have been very successful for many years, and getting even better at expanding access to tertiary studies. The latest OECD report comparing the educational attainment of the population in member countries shows Canada in a very positive perspective. And it is likely that high and improving educational attainment has moderated the inexorable advance of inequality in the country. (For extensive research into inequality and social mobility in Canada, the USA , and other international comparisons, see http://www.miles.corak.files.wordpress.com)

So what do the results of OECD: Education at a Glance 2014 show? A lot, and someone at OECD has a sense of humour, since the “Glance” results in some 570 tightly-packed pages of comparative, sometimes mind-numbing information.

Access to higher education:

It seems Canada has been doing well in getting people into tertiary (postsecondary academic, technical and vocational) education for some time. 55-64 year olds have a relatively high rate of attaining tertiary education at 44% —- and that rate is still improving as 58% of 30-34 year olds have tertiary education. In the USA, 42% of 55-64 year olds have tertiary education, but the outcomes for younger generations have barely improved as 45% of 30-34 year olds have tertiary education. The wealth of America is not translating into increased opportunity for American youth. In the UK, 33% of 55-64 year olds and 50% of 30-34 year olds have tertiary education, and in France, Germany and Sweden the figures are 20 and 44%; 26 and 32%, and 29 and 48% respectively. So access to higher education in Canada has been relatively very good and continues to be so. (Education at a Glance 2014, Table A1.3a)

The role of family background is very important in the educational attainment of children. In Canada only 3% of 20-34 year olds enrolled in tertiary education have parents with less than upper secondary (high school) education, while 73% have parents who have tertiary education. Most countries show comparable, if less extreme, differences. (Table A4.1a) The high percentage of 73% reflects the high proportion of parents with tertiary education. And the increasing percentage of young parents who have tertiary education will undoubtedly lead to increased demand for their children to have broad access to education.

Education, employment and earnings:

Having more education increases the chances of being employed, and this benefit accrues both to the individual and the society (in the latter case through more consumption and higher tax revenues). In 2012 the employment rates for people 25-64 in Canada without high school, with high school and with university education were 61%, 73% and 83%. Likewise earnings reflect education levels. In Canada, 25-34 year olds with tertiary education earned 133% of those with only upper secondary (high school). This differential grows over time, since 55-64 year olds with tertiary education earned 185% of what their counterparts with high school earned. In the USA, the difference among 55-64 year olds was 180% but it seems to kick in more quickly since the tertiary-educated 25-34 year olds were already earning much more at 170%. This could be an indicator of still-increasing inequality in market incomes in the USA.

Age of graduation:

An important measure for attaining higher levels of education is the age at which that education is achieved. Getting a person into a career job a year earlier (younger) means another year of an educated worker’s production, as well as the tax revenues resulting from that work. Here again, Canada is doing very well, with first degrees being achieved on average at an age below 26. The OECD average is a bit over 26, and in some countries such as Sweden and Finland the average is above 28 years. Belgium is the top performer on this measure with a surprisingly low average age of 22.

Gender differences

It may come as a surprise to some, but the differences between women’s and men’s average full-time, full-year earnings seem to have remained stable in all educational categories (without upper secondary, with upper secondary and with tertiary) and not to be changing much over time. In Canada women in the three categories earn about 70% of what men earn and this is consistent among all the age sub-groups within the 25-64 year age range. In other countries the consistency is also there, although women’s earnings seem to be relatively higher, in the 75-80% range for Germany, the UK and Scandinavian countries. The USA figures are similar to Canada’s. (Table A6.3a) A major change is gradually taking place though, in that women are consistently becoming the majority of graduates at higher levels, although “traditional” occupational preferences persist (women more likely to choose health, education occupations; men more prominent in engineering and physical sciences).

Public and private investment in education:

OECD countries in general spend more than 1.5% of GDP on tertiary education, with Canada and the USA spending more than 2.4% (combining public and private sources). While Canada continued to increase education spending during and after the 2008 economic crisis, the USA was forced to reduce public spending. Among OECD nations, Canada spends the largest overall percentage of GDP on tertiary education, both through public spending (1.6%) where it is only exceeded by Denmark and Finland, and in overall total spending when private spending is included. The USA, also a high total spender, contributes only 1% of GDP in public funds, but students contribute another 1.6%, to bring the total close to Canada’s 2.8%. (Chart B2.2) Education spending is far and away higher in Canada and the USA than other countries. Compared to Canada’s 2.8% of GDP, France and Germany spend 1.5 and 1.3% while Norway and Sweden spend 1.7%. Big difference.

In spending figures, looks can be deceiving. Canadian governments contribute a bit less than 60% of tertiary education costs, while countries like Denmark, Germany, Finland, Norway and Germany contribute in the 85-95% range. But they are contributing to a much lower total expenditure, such that Canada’s public contributions are on a par with them, but private contributions from individuals and private companies and organizations bring the total up as noted previously. So Canada in total spends more and gets broader participation in tertiary education. (Chart B3.2)

How good is an investment in higher education? The OECD worked out the costs, to the individual as well as to governments, of attaining a tertiary education. The costs included direct costs, foregone earnings and foregone tax revenues on those earnings, as well as subsequent higher lifetime earnings, higher tax contributions, higher social insurance contributions, etc. Turns out it is a pretty good investment for both. Comparing a man attaining tertiary education to a man attaining upper secondary or non-tertiary vocational education, in Canada the individual would receive (in 2010 US dollars) a lifetime net benefit after costs, of about $162,000. This is said to equal an internal rate of return of 10.2%. For the government the net benefit is $71,000 for a rate of return of 8.9%. Many countries have a similar experience, including the USA. Scandinavian countries receive lower rates of return to government (5-6%) and higher to the individual, as those countries pay a higher portion of the costs through government. The UK, which pays a lower public percentage of costs than other countries, runs their system at a whopping rate of return of 26%. (Table A7.4a)

Student loans are available in many countries but the amount varies considerably. In 2010/11, students in Canadian tertiary institutions were able to borrow an average maximum of USD $4421. The figure was about the same in Denmark and New Zealand, and twice as much in Norway and the UK. In the USA it was a whopping $15,500 average for 84% of full-time full-year students. (Table B5.3)

Editor’s comment: Canada can still improve access to education and should do so, both to combat inequality and to be competitive. But it is important to ensure that education is not only for all people but also for all needed skills, providing academic, technical and vocational skills as well as skills for self-directed learning and career management. Otherwise the country could suffer from what we will call “educational inflation” – diminishing returns from increasing the required attainments at entry for jobs which pay no more, and where the increased education is not likely to increase productivity.


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