http://orcid.org/0000-0001-9957-3914
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ABSTRACT
How much does a single graduation cohort from further education colleges contribute to an open regional economy? Spatial Economic Analysis. This paper combines elements of growth accounting and numerical general equilibrium analysis to produce an alternative micro-to-macro modelling approach. This is used to evaluate the macroeconomic impact on the Scottish economy of the human capital generated by a single graduation cohort from further education colleges. The macroeconomic impact is found to be significant and larger than growth accounting would suggest due to the associated endogenous investment, employment and competitiveness effects. From a policy perspective this identifies the importance of the conventional teaching role of education institutions and the key function played by further education colleges in this process.
摘要
扩充教育学院的单一学年毕业生对于开放的区域经济之贡献程度为何？Spatial Economic Analysis. 本文结合成长会计与数值的一般均衡分析之元素，生产微观至巨观模式化方法的替代，并用来评估由扩充教育学院单一学年毕业生所生产的人力资本之巨观经济对苏格兰经济的影响。由于相关的内生投资、就业与竞争效应，巨观经济影响可能较成长会计所显示的更为显着且巨大。就政策的角度而言，它指认了教育机构的传统教学角色，以及扩充教育学院在此一过程中扮演的关键功能。
RÉSUMÉ
Jusqu’à quel point les diplômés d’une seule promotion d’étudiants des collèges d’enseignement postscolaire est-ce qu’ils contribuent à une économie régionale ouverte? Spatial Economic Analysis. Cet article réunit des éléments de la méthodologie de la comptabilité de croissance et de l’analyse numérique de l’équilibre général afin de construire une alternative à la modélisation micro–macro. On s’en sert pour évaluer l’impact macroéconomique sur l’économie écossaise du capital humain engendré par les diplômés d’une seule promotion d’étudiants des collèges d’enseignement postscolaire. Il s’avère que l’impact macroéconomique est significatif et plus important que ne laisserait supposer la méthodologie de la comptabilité de croissance à cause de l’impact endogène de l’investissement, de l’emploi et de la compétitivité. Du point de vue de la politique, ici on identifie l’importance du rôle classique pédagogique des établissements d’éducation et la fonction clé jouée par les collèges d’enseignement postscolaire dans ce processus.
RESUMEN
¿En qué medida contribuye una única promoción de licenciados de las escuelas superiores de educación complementaria a una economía regional abierta? Spatial Economic Analysis. En este artículo proponemos una alternativa al enfoque de modelo micro a macro al combinar los elementos de la compatibilidad de crecimiento con el análisis del equilibrio general numérico. Esto sirve para evaluar el impacto macroeconómico en la economía escocesa del capital humano generado por una única promoción de licenciados de las escuelas superiores de educación complementaria. Observamos que el impacto macroeconómico es significativo y mayor de lo que indica la compatibilidad de crecimiento debido a los efectos relacionados de la inversión endógena, el empleo y la competitividad. Desde una perspectiva política, esto reconoce la importancia del papel de la enseñanza convencional en las instituciones educativas y la función principal que desempeñan en este proceso las escuelas superiores de educación complementaria.
ACKNOWLEDGEMENTS
The authors acknowledge the valuable comments made by two anonymous reviewers and the editor. They are also grateful for the input of the seminar participants in the School of Education, University of Glasgow, UK, as well as the conference participants at Regional Science Association International – British and Irish Section (RSAI-BIS) in Cambridge, UK, and the European Regional Science Association (ERSA) in Palermo, Italy. The David Hume Institute provided access to data as part of its policy dialogue on the role of further education in Scotland. The views expressed are purely those of the authors; Patrizio Lecca does not in any circumstances state an official position of the European Commission.
DISCLOSURE STATEMENT
No potential conflict of interest was reported by the authors.
ORCID
Kristinn Hermannsson http://orcid.org/0000-0001-9957-3914
Patrizio Lecca http://orcid.org/0000-0002-1053-3869
Notes
1 This is typically specified in a quadratic form to capture the increase in wages with experience (learning on the job) and subsequent decline after middle age (Mincer, Citation1974, ch. 4). Ruzik-Sierdzinska, Lis, Potoczna, Belloni, and Villosio (Citation2013) provide a summary of recent evidence for several European countries. Age–earnings profiles for the UK are found to be relatively flat. In this analysis, the simplifying assumption is adopted that the age–earnings profile is flat over a working life and newly qualified workers are given the average wage premium of identical workers.
2 This explanation is consistent with evidence from recent work showing that despite the persistence of stable average wage premia, the variation in individuals’ wage premia has increased over time (Green & Zhu, Citation2010; Walker & Zhu, Citation2008).
3 The genesis of this literature is typically attributed to Solow (Citation1956), though for a discussion of precedents, see Griliches (Citation1996).
4 This assumption is relaxed in the more fully specified CGE model used in the fifth section.
5 The wage curve is usually expressed as a relationship between the real wage and the unemployment rate, and this is how it operates in the CGE model outlined in the fifth section. However, given that the unemployment rate equals 1 minus the employment rate, the relationship can be reparameterized as one between the real wage and the employment rate, which is more convenient here.
6 Recall that all investment is externally sourced and the interest rate is fixed in extra-regional markets.
7 In the CGE regional model we often essentially assume an infinitely elastic labour supply in the long run, driven by flow equilibrium migration. However, in the simulations presented in the fifth section, for reasons explained there, migration is turned off.
8 For a detailed discussion of the evidence base, see Hermannsson, Lecca, et al. (Citation2014, sect. 2.2).
9 Given that we apply this measure in a model in which labour inputs are measured in annual terms, the relative wage measure is for annual wage receipts.
10 This survey was carried out by the David Hume Institute in collaboration with Scotland’s colleges and the Scottish Funding Council as part of a research initiative on further education, the Scottish labour market and the wider economy. For details, see Hermannsson et al. (Citation2012).
11 NVQs were developed for England, Wales and Northern Ireland in the 1980s. They form an outcomes-based framework where the NVQs are derived from occupational standards to identify the competencies required to meet each level. A parallel system was implemented in Scotland, the Scottish Vocational Qualifications (SVQs). For a discussion of the development of this system, see Unwin, Fuller, and Turbin (Citation2004, ch. 3).
12 Formally qualifications that are between NVQ increments involve the highest level of study (unit), being: Advanced higher, Higher, Intermediate 2, Intermediate 1 or Access. Also included are other non-advanced certificate or equivalent; Other non-advanced diploma or equivalent; National Units alone (formerly National Certificate Modules) or any other recognized qualification.
13 We assume that each student achieving an NVQ qualification is moving up one NVQ level. The students might already have a qualification at this level, but we expect the probability to be low.
14 We have no information about the domicile of Scottish FEC students but make the assumption here that they are all from Scotland.
15 The average cost per efficiency unit of human capital generated in Scottish HEIs is £105,000, 8% higher than in Scottish FECs, where the cost is £97,000. This is simply the opportunity cost to Scottish citizens in terms of the foregone public expenditure on other goods and services that could have been otherwise provided or subsidized by the Scottish government. Furthermore, it only includes the funding of the education institutions themselves and excludes other student-related expenditures, such as maintenance grants.
16 AMOS = a macro–micro model of Scotland.
17 The impact of acquired skills on labour efficiency might vary with work experience, with the Mincer equation only picking up the average impact over the individual’s whole working life. Whilst this would affect the evolution of the resulting economic effects, it would be of less importance for their maximum impact or the discounted values.
18 In order to operationalize the forward-looking model, we need to impose a long-run equilibrium condition in the final period (period 80). However, as is clear from , the model is effectively in long-run equilibrium by period 60.
19 The relatively lower effects on economic activity in the short run are driven by the assumption that we introduce an unannounced efficiency shock into an economy taken to be initially in long-run equilibrium. Therefore, the economy takes some time to adjust to this unanticipated supply-side shock. The medium-term impacts are a better measure of the continuing impact of one year’s output from a stable further education system.
20 Of course, although the Scottish government decides on the level of further and higher education spending in Scotland, at present it receives a very small share of its income in locally raised taxes. However, this will change with the implementation of the Scotland Act 2012 and the adjustments to Scotland’s devolved fiscal position resulting from the recommendations of the Smith Commission (Citation2014).
21 Essentially the size of the efficiency change would vary endogenously with the extent of migration.
22 The literature identifies various non-monetary benefits of education to its recipient, as well as the wider monetary and non-monetary impacts of education on society as a whole (e.g., Hermannsson, Lisenkova, Lecca, McGregor, & Swales, Citation2016; McMahon, Citation2004, Citation2009).