While many researchers have recently argued that education and training is
a key part of the
solution to the problem of persistent labour market disadvantage (Fortin, 2005;
Jackson, 2005;
OECD, 1999; OECD, 2003a; OECD, 2003b), not everyone agrees. Other well known
researchers have argued that such strategies are unlikely to be effective or
efficient (Esping-Andersen, 2001; Esping-Andersen, 2004; Lefebvre and Merrigan,
2003). For example, economists Pierre Lefebvre and Philip Merrigan (2003) argue
that the available evidence clearly suggests that adults past a certain age
and below a certain skill level obtain poor returns to skill investment. They
conclude that “training is likely to represent both an inefficient investment
policy for lowskilled workers and an inefficient transfer policy” (p.50).
Before we examine how to improve access to education it is important to look
at what we know and do not know about the efficacy of skills upgrading as a
strategy to help less-educated individuals improve their labour market prospects.
The key question is: would the educationally disadvantaged actually improve their labour market situation were they to pursue more education and training? The answer to this question hinges on why the least educated are also the least likely to upgrade their skills. Do participation differences reflect the fact that less-educated individuals are more likely to face barriers to participation (such as cost, lack of employer support, and family responsibilities)? If so, we would expect that interventions designed to remove these barriers would lead to improved prospects for the least educated. Or on the other hand, do differences in participation reflect real or expected differences in the ‘returns’ to investments in education and training? In other words, are the least educated less likely to participate because they are also less likely to gain? Under this scenario, the least educated would be better served by policy interventions that would have a more predictable effect on their income, such as income subsidies or a higher minimum wage. In this section we provide an overview of the recent literature that addresses these questions.
A major reference point for the sceptics of the ‘skills upgrading’ strategy is the work of economist, James Heckman and his colleagues (see Heckman, 2003). Two basic claims arise from this work. The first is that early childhood investment is more efficient than investments later in life. Learning is a dynamic process and is most effective when it begins at a young age and continues through adulthood. In other words, ‘learning begets learning’. Skills and abilities acquired as a young child positively affect learning and achievement that occurs later in life. Thus strong complementarities emerge across the three main components of human capital – early ability; formal education; and job-related skills and knowledge (Blundell, Dearden, Meghir, and Sianesi, 1999). The cumulative nature of skills formation means that an individual’s current stock of human capital provides both strong incentives and more opportunities for further investments in human capital. There is a large body of evidence that supports these claims (Carneiro and Heckman, 2003; Cawley, Heckman, and Lochner, 2000; Heckman and Vytlacil, 2001; Murnane, Willett, and Levy, 1995). There is no question that early childhood investment is always the first best strategy to ensure a productive and democratic society.