Graduates and Regional Productivity. Graham Gudgin Regional Forecasts Ltd

Transcription

1 Graduates and Regional Productivity Graham Gudgin Regional Forecasts Ltd

2 Extensive Literature in Economics linking Education and productivity: Private returns to Education Cross-Country Studies

3 Private Returns to Education Wages are higher for better qualified employees. The usual measure is the increase relative to those with no qualifications

4 Private Returns to Education % Increase in Hourly Wage at Age 33 Qualification MEN WOMEN BASIC GCSE GCSE'S A LEVEL DEGREE source Dearden(1999)

5 Cross-Country Studies A large number of studies have been undertaken examining the impact of education on per capita GDP These find that an extra years education in OECD countries add around 6% to national per capita income Most recent studies use the IALS to directly measure ability in literacy and numeracy. These show an elasticity of 2.5 to per capita GVA from increases in literacy/numeracy. However there is less evidence for an impact of graduatelevel skills alone

6 My interest is in the impact of educational qualifications on productivity and living standards across UK regions There is good evidence that graduates make a large difference to regional productivity

7 GVA Difference from UK Average % Pt Difference from UK average GL SE EN SW EM WM NW YH NE WW SC NI -30 Region

8 Components of Regional Differences in Per Capita GVA 2003 Percentage points Commuting etc Dependency Rate Employment Rate Labour Productivity GL SE EN SW EM WM NW YH NE WW SC NI Regions

9 Employment Rates: Difference From UK Average % point diff. from UK average SE+GL EN SW EM WM NW YH NE WW SC NI -12

10 GVA per Head and Productivity GVA per Employment GVA per Head % point diff. from UK average GL SE EN SW EM WM NW YH NE WW SC NI Regions

11 GVA per Employee (UK=100) South N.East Wales Scotland N.Ireland UK (UK = 100)

12 Regional Wages Closely Reflect Productivity % point diff. from UK average GVA per Employee Average Weekly Wages GL SE EN SW EM WM NW YH NE WW SC NI -15 Regions

13 Average Weekly Wages 2003 LEVEL4/5 QUALIFICATIONS (% of all 16-74) & WAGES BY REGION Level 4/5 as % as % of All People 16/74

14 Highest Qualification of People (percent) 2001 all popn aged level0 level1 level2 level3 LEVEL4,5 ENGLAND&WALES NE NW YH EM WM EN GL SE SW WW SC NI

15 Average Weekly Wages Reflect % of People Who Are Graduates Average Weekly Full Time Wage ( ) y = x R 2 = Doncaster Stoke Rest of NI Hl Birmingham Carlisle Liverpool Derby Loughborough Glasgow Belf ast Tyneside Manchester Southampton Sw ansea Craw ley Aberdeen Basingstoke Brighton Guildford and Aldershot Edinburgh % Graduates (2001) York Cardif f Bristol Oxford London Cambridge Sources: NES 2003, Census 2001

16 % of EMPLOYED WHO ARE GRADS in PRIVATE SECTOR vs AVERAGE EARNINGS 2001 Surrey Berkshire London WEEKLY WAGE Herts Birmingham and Solihull Hants MK, Oxon, Bucks Cambs Essex Ches,Warringtn Kent W of England Mersey Tyne Derbys N Yorks Tees Durham Mid Wales Northumberland y = x R 2 = % PRIVATE SECTOR GRADS

17 % of EMPLOYED POP GRADS in PUBLIC SECTOR 2001 vs Av Earnings 2001 Essex Berkshire Hertfordshire Surrey London TOTAL y = x R 2 = Cambridgeshire Black Country Lincolnshire and Rutland NI Mid Wales Northumberland

18 Average Weekly Wages LEVEL 0 QUALIFICATIONS (% OF ALL 16-74) & WAGES BY REGION level 0 as % all people 16-74

19 Average Wages Low in Areas With High levels of Unqualified People Average Weekly Full Time Wage ( ) Guildford and Aldershot Belfast NI London y = x R 2 = % with no qualifications (2001) Dudley & Sandw ell

20 Highest Qualification By Occupation Scotland 2001 Elementary Machine Operatives Sales Graduates Other Higher Education Personal services Skilled Trades Admin/Secretarial Assoc Professionals Professional Managers percent

21 Highest Qualification UK 2003 Percent of Total Other services Public services Finance Tranp,Comms Distribn Constr Manufg Graduate Other HE Energy Agri Percent

22 GVA per Head Closely Related To Employment in Financial and Business Services Total GVA per head ( 000's) R 2 = 0.94 NI WW GL SE YH SW EM SC EN NW NE WM Employment in financial & business services (% of total)

23 Concentration of business services, 2003 Ten most concentrated areas Region Unitary Authority % of Total Employees South East Woking 37.0 South East Bracknell Forest 36.9 South East Hart 34.3 Greater London City of London 33.9 South East Windsor and Maidenhead 33.6 South East Vale of White Horse 33.4 Greater London Westminster, City of 32.1 South East Wokingham 32.1 South East Wycombe 29.8 Greater London Camden 29.4 Ten least concentrated areas Region Unitary Authority % of Total Employees Northern Ireland Fermanagh 3.0 South West Isles of Scilly 3.0 Northern Ireland Down 2.8 North East Wansbeck 2.8 Northern Ireland Moyle 2.7 Northern Ireland Carrickfergus 2.7 Northern Ireland Larne 2.5 Northern Ireland Magherafelt 2.4 Northern Ireland Limavady 2.0 Northern Ireland Strabane 1.8

24 Concentration of financial services, 2003 Ten most concentrated areas Region Unitary Authority % of Total Employees Greater London City of London 46.5 Greater London Tower Hamlets 25.1 Scotland Edinburgh, City of 16.0 Eastern Norwich 13.5 Eastern Southend-on-Sea 13.3 South East Reigate and Banstead 12.8 North West Chester 11.6 South West Bournemouth 11.6 South West Poole 10.7 South East Worthing 9.5 Ten least concentrated areas Region Unitary Authority % of Total Employees South West Forest of Dean 0.7 Yorkshire & Humber Selby 0.7 South West Purbeck 0.7 East Midlands Corby 0.7 Northern Ireland Castlereagh 0.7 East Midlands Daventry 0.6 Northern Ireland Antrim 0.6 West Midlands North Warwickshire 0.5 North East Teesdale 0.5 East Midlands Bolsover 0.4

25 MFG Employment & Per capita GVA GVA per Head y = x x R 2 = MFG Emp Share of Total Emp

26 Concentration of manufacturing, 2003 Ten most concentrated areas Region Unitary Authority % of Total Employees East Midlands Corby 36.6 North West Pendle 35.2 Wales Flintshire 34.4 North West Fylde 33.9 North East Sedgefield 33.7 North West Copeland 33.3 Wales Blaenau Gwent 31.6 North West Ribble Valley 31.0 North East Derwentside 29.9 Wales Caerphilly 29.5 Ten least concentrated areas Region Unitary Authority % of Total Employees South West Weymouth and Portland 3.8 Greater London Kensington and Chelsea 3.8 Greater London Barnet 3.5 South West Bournemouth 3.2 Greater London Westminster, City of 3.1 South West Isles of Scilly 3.1 South East Epsom and Ewell 2.8 Greater London Lambeth 2.6 North East Castle Morpeth 2.4 Greater London City of London 1.1

27 Conclusions There is a clear positive return to education at every level: Personal Regional National At regional level the % of graduates in the private sector has a large impact on average wages and hence on productivity and per capita GVA The main task for regional economic development should be to attract graduate-employing firms. Many of these are to be found in financial and business services.