Theirworld

Education and Economics

Mastering macro- and micro-economic concepts? Analysing a country’s economic growth or building a model for its future potential? Use this page to gain further understanding of all of the ways in which education unlocks economic opportunity and prosperity at all levels.

Investing in education creates a talented workforce, with the skills and innovation needed to address pressing challenges, reducing poverty, inequality, and improving social mobility. Educated individuals are more empowered to make sound economic choices for themselves and their families, building human capital and promoting economic growth at local, regional, and global levels — the foundation to a peaceful, productive society.

Looking for questions to centre your research efforts, or interesting issues or problems to explore? These research questions can help provide a path to a focused research and writing process.

  • How can investing in education help create jobs and build human capital?
  • Does investing in education generate a financial return?
  • How does increasing educational opportunity affect poverty rates?
  • What is the relationship between education and social mobility?
  • What are the long-term consequences of not investing in education?
  • Does investing in education help to reduce inequality?
  • What is the relationship between education and a country’s GDP?
  • Who is most impacted by cuts to education budgets?
  • Is additional investment in education needed?
  • Who is investing in education?

Looking for clear topic sentences to express your opinion, or thesis statements to serve as the core of your essay? Theirworld’s examples can help to form the base of your argument.

Overall
  • Increasing educational opportunity for the most disadvantaged is an efficient way to reduce poverty, inequality, and improve social mobility, all critical to long-term economic growth
  • Education empowers individuals to make sound economic choices and expand opportunity for themselves and their families, building human capital and promoting economic growth at local, regional, and global levels
  • Education is essential for economic recovery, growth and job creation
Economic benefits
  • Investing in the next generation of innovators, makers and creators through quality education is the best way to jump-start an economy
  • Education reduces the chances that poverty will be passed on to the next generation
  • Education generates above average financial returns
  • Educating girls is one of the most efficient ways to generate economic growth
  • Investing in early childhood education generates impressive economic returns 
  • Education boosts wages and creates informed consumers with disposable income
  • There is a positive association between education and GDP per capita
  • Providing all students with basic cognitive skills can boost economic outcomes, especially in developing countries
  • Educating girls saves countries money
  • Education helps young people to participate in the economy
Skills and jobs
  • Investing in education creates a talented workforce, with the skills and innovation needed to address pressing challenges, unlocking economic opportunity, and providing consumers with disposable income
  • Education builds human capital and promotes economic growth
  • Investing in education is a highly effective way to create jobs
  • Highly educated societies are more resilient in the labour market in a rapidly changing world
Equity
  • Cuts to education budgets stand to impact those most marginalised — racial and ethnic minorities, the poor, and women
  • Education greatly reduces inequality
  • An equitable education system provides economic opportunity for all, laying the foundation for a peaceful, productive and fair society
Cost
  • The cost of not providing education is overwhelming
  • Cuts to education after an economic downturn hurt future growth
  • To achieve the Sustainable Development Goal for education, international aid for education needs to increase dramatically, even more following the global Covid-19 pandemic
Social benefits
  • Increased education is associated with higher wages, savings and protection from fraud and exploitation
  • When people with disabilities receive higher levels of education, their household is less likely to live in poverty
  • Inclusive education is a low-cost investment with high returns
  • Education promotes social mobility by giving people skills that allow them to get better and more secure work

Seeking key messages, facts, and opinions to build your evidence base? Find the most up-to-date, pre-sourced data points to help you make a robust case for education and economics here.

Challenges

Economic costs
  • There is an economic cost to not investing in education. In India alone, nearly two-thirds of children born each year do not finish secondary school for a plethora of largely preventable reasons. In pure economic terms, this represents an opportunity cost of over US$100 billion to national annual economic output, or about 5% of GDP. (Winthrop et al., 2013)
  • When public education systems are weak, the business community incurs significant costs. Companies bear costs to compensate for poor-quality education and the low skill levels of graduates, including investing in remedial training programmes. In India, for example, in one five-year period information technology companies almost doubled the amount they spent on training employees, from US$1 billion in 2007 to close to US$2 billion in 2011. (Winthrop et al., 2013)
  • Less educated girls who marry as children contribute great economic costs to governments. If child marriage was ended and girls were in school, governments could save up to US$17 billion per year by 2030. (World Bank, 2017)
  • Child marriage reduces girls’ expected earnings in adulthood by 9%. The World Bank estimated that lost earnings associated with child marriage for 15 high prevalence countries could reach US$26 billion in 2015. (World Bank, 2017)
  • The cost of inaction is high. For example, if Nicaragua does not expand universal preschool, it will lose the equivalent of 4.1% of GDP in unrealised development potential. (Richter et al., 2017)
  • The cost of not providing education is staggering. Limited educational opportunities and barriers for girls cost the world economy between US$15 trillion and US$30 trillion. In nine countries, the cost of out-of-school children was estimated to be greater than the value of an entire year of GDP growth. (World Bank, 2018)  (Thomas & Burnett, 2013)
  • Education cuts after an economic crisis can hurt learning and future growth. In the US, when school spending was cut by 10% after the 2008 recession, test scores fell by nearly 8%. (Jackson et al., 2019)
  • CEOs say lack of investment in education is costing them money. In a global survey of more than 1,000 CEOs, almost 30% said that talent constraints kept them from pursuing market opportunities. Labour costs are increasing; in the same survey 43% of CEOs said talent-related expenses, including turnover, have a negative impact on their firm’s growth and profitability. (Winthrop et al., 2013)
  • Post-pandemic economic recovery depends on strong education systems. Predictions estimated that the current pandemic would wipe out 6.7% of working hours globally in the second quarter of 2020, equivalent to 195 million full-time workers. Some jobs will never return and others will cease to exist. Education prepares young people to enter into a new and changing workforce. (ILO, 2020)
  • Economic recovery following a pandemic is dependent on investment in strong education. Without immediate remedial education when school resumes, some estimates suggest today’s cohort of learners could face a US$17 trillion loss in future earnings over the next generation, equivalent to 14% of today’s global GDP. (UNICEF, 2021)
  • Failure to educate girls is costly. Ongoing barriers to girls’ education are costing countries between US$15 trillion to US$30 trillion in lost lifetime productivity and earnings. (World Bank, 2018)
  • School closures have economic costs. Without immediate remedial education when school resumes, some estimates suggest today’s cohort of learners could face a US$10 trillion loss in future earnings over the next generation. (World Bank, 2020)
  • Reducing investment in education leads to greater health cost burdens on government budgets. In the US, reduced spending in education led to more illness and higher medical care costs that offset the intended ‘savings’ of the same budget cuts. (AAFP, 2015)
  • Exclusion of children with disabilities has high economic costs. In Bangladesh, the lack of schooling and employment for learners with disabilities and their caregivers costs an estimated US$1.2 billion annually, or 1.74% of GDP. (International Disability and Development Consortium, 2016) (World Bank, 2008)
  • When peacebuilding efforts fail, the costs to countries due to lost education and human capital are high. Over a three-year period, conflict cost nearly US$470 million (1.7% of GDP) in the Democratic Republic of Congo and US$2.9 billion (1.3% of GDP) in Pakistan. (Jones & Naylor, 2014)
  • More investment in early childhood education is crucial to help children reach their full potential. It is currently estimated that 250 million or 43% of children under five in low- and middle-income countries will not reach their developmental potential, which means a loss of 19.8% in adult annual income. (Black et al., 2017)
Funding
  • A substantial increase in investment is needed, particularly in early education. In 2017, nine major donors in health, nutrition, education, and sanitation spent less than 6% of total official development assistance on early childhood development. Only 1% of all early childhood development aid was directed to education. (Zubairi and Rose/Theirworld, 2018)
  • Pre-pandemic, it was estimated that education finance needed to drastically increase to meet the Sustainable Development Goals. To advance learning levels in lower-income countries to those of higher-income countries, spending on education needs to more than double between 2015 and 2030, from approximately US$1.25 trillion per year to nearly US$3 trillion. (International Commission on Financing Global Education Opportunity, 2016)
  • International aid for education needs to increase if lower-income countries are to reach the Sustainable Development Goals (SDGs). Estimates at the introduction of the SDGs suggested that after domestic resources were maximised, international support for education to developing countries would need to increase from a current estimated US$16 billion per year to US$89 billion per year by 2030. (International Commission on Financing Global Education Opportunity, 2016)
  • Despite aid increases for education, global aid priorities do not align with the need. Only 47% of aid to education was spent on basic and secondary education in low- and lower-middle-income countries, the two subsectors and two country groups perceived as most in need. (UNESCO, 2020)
  • International finance is in danger due to the global pandemic which has caused a shock greater than the 2008 financial crisis. Global aid is likely to decline by up to US$2 billion from 2018 to 2022 as a result of recession caused by Covid-19, resulting in a 12% drop in international support for education. (UNESCO, 2020) (World Bank, 2020)
  • Lagging support for education may result in more children being out of school than before the pandemic. If current funding trends continue, the number of out-of-school children — particularly those hardest to reach in many of the poorest countries — will continue to increase. It is estimated that 10 million children previously in school will not return after. (Save the Children, 2020)
  • Philanthropy will need to play a significant role to help address the education funding gap. Funding for education from philanthropists, corporations and charitable organisations will need to reach US$20 billion in 2030 if we are to get every child in school and learning. (International Commission for Financing Global Education Opportunity, 2016)
  • New and additional sources of funding for education are required. Sub-Saharan Africa currently faces an annual education financing gap of US$40 billion. (AfDB, 2020)
  • Significant commitment and investment to education needs to be marshaled to return progress made to pre-pandemic levels. Modeling suggests that grade three reading proficiency will only return to pre-pandemic levels in 2030 at current rates. (Gustafsson, 2021)
Skills and jobs
  • There is a talent shortfall. Nearly seven in 10 employers reported talent shortages in 2019, the worst level ever and a jump of 17% from the year before and more than three times higher than a decade ago. (CNBC, 2020)
  • If current trends continue, by 2030 less than 10% of young people in low-income countries will be on track to gain basic secondary level skills. The costs of this education crisis – unemployment, poverty, inequality and instability – could undermine the very fabric of our economies and societies. (Education Commission, 2016)
  • It is estimated that by 2030 more than half of young people worldwide will not have the basic skills or qualifications necessary for the workforce. (Education Commission, 2016)
  • Just a few years ago, technologies associated with the Fourth Industrial Revolution (4IR) were projected potentially to displace more than five million jobs by 2020, most of the loss concentrated in low- and middle-skill jobs. (Deloitte & GBCE, 2018) (McKinsey, 2017)
  • The global skills mismatch is currently estimated to affect two in five employees in OECD countries, costing the global economy 6% every year in terms of lost labour productivity. (Boston Consulting Group, 2020)
Corruption
  • Corruption in the procurement process contributes to high costs and substandard learning materials. In the Philippines, the cost of textbooks was 61% higher as a result of losses during distribution, 40% higher as a result of corruption in bidding, and 5% higher as a result of replacing poor-quality textbooks. (Reyes, 2009)
  • Systemic corruption impedes gains in learning outcomes. Countries with higher rates of corruption were less likely to raise learning outcomes effectively, even when provided with additional school resources and funds. (Rajkumar & Swaroop, 2008) (Suryadarma, 2012)
  • Corruption in education is significant and widespread. In the EU, the education sector experienced more corruption than the construction sector between 2009 and 2014. (GEM, 2017)
  • Corruption squanders the resources available for schooling. One-quarter of all funds for public education — and occasionally up to half — never reach schools. (Dehn et al., 2003)
  • Corruption can directly impact a child’s education. Charging fraudulent fees or soliciting bribes for free educational services creates financial hardship for families, reducing access and increasing dropout, often for those most marginalised. (Heyneman et al., 2008)
  • Corrupt school administrations can drain a school of its financial resources. In Nigeria, 8,000 reports of non-existent “ghost” teachers created by administrators, or school personnel collecting an inflated salary, were made across four states in the first half of 2016 alone. (UNESCO, 2017)
Equity
  • Education can only be a solution for anti-racism when it is coupled with other practices, policies and redistributions of inequitable investments. A recent study in the US shows that school districts with a majority of students of colour receive US$23 billion less than predominately white school districts, despite serving the same number of students. (EdBuild, 2016)
  • Current education budget cuts due to Covid-19 could negatively impact racial and ethnic monitories. Given the economic damage, state budgets are already stressed. Cuts to primary and secondary education are likely to hit low-income and racial- and ethnic-minority students disproportionately, which could further widen the achievement gap. (McKinsey & Company, 2020)
  • The benefits of education for all will not be fully realised without quality education for all. Great inequities exist in learning and the quality of education provided — even for children with a primary education — with learning outcomes often the lowest for children from disadvantaged backgrounds. In low- and middle-income countries, only 18 of the poorest youth complete secondary school for every 100 of the richest youth. In at least 20 countries, mostly in sub-Saharan Africa, hardly any poor rural young women complete secondary school. (GEM, 2020) (UNICEF, 2015)
  • Providing equitable education opportunities starts with more equitable education financing. Governments often spend the least on the children most often excluded from education. In Malawi, the most educated 10% consume 130 times the amount of public education funds than the bottom 10%. (UNICEF, 2015)
  • Progressive education policies are needed to proactively address systemic learning inequality. Across 30 countries, children from the poorest quintile of households were four times more likely to be out of school compared with those from the wealthiest households (40% versus 10%). (UIS, 2012)

Messages

Economic benefits
  • Supporting education in emerging markets will have high payoffs. By 2030, not only will emerging market economies contribute 65% of global GDP, but they will also be home to the majority of the world’s working-age population. (Winthrop et al., 2013)
  • A small investment in education yields huge outcomes for employers. Data shows that US$1 invested in education today can return US$53 in value to the employer at the start of a person’s working years. (UNICEF, 2020)
  • Getting all children into primary education, while raising learning standards, could boost economic growth by 2% annually in low-income countries. If all students in low-income countries acquired basic reading skills, 171 million people could be lifted out of poverty, equivalent to a 12% reduction in world poverty. (UN Global Compact, 2013)
  • Early childhood development is one of the best investments that can be made. Each dollar invested in early childhood education can yield a return as high as US$17 for the most disadvantaged children. (Theirworld, 2017)
  • The cost to integrate early childhood development into existing services is not high. An additional US$0.50 per person each year is all that is needed for early childhood development to be integrated into existing services. (Light for the World, 2020)
  • Donors have an important role to play in supporting an increase in finance for education. To meet the SDGs, donors need to increase aid to education to 15% of total official development assistance and channel additional aid multilaterally. (International Commission on Financing Global Education Opportunity, 2016)
  • Education aid was increasing before the pandemic struck. Aid to education in 2018 reached a record of US$15.6 billion, increasing 9% from the prior year. This represented the highest allocation of aid ever to go to basic education, secondary education and higher education. (UNESCO, 2020)
  • Investing in education in developing countries to reduce inequality is a moral imperative. On average, a low-income country will invest US$1,300 in a child’s education, while the average high-income country will spend US$110,000 (World Bank, 2020)
  • Norway’s commitment to education at the outset of the Sustainable Development Goals demonstrates how a donor country can affect significant impact. Norway doubled its investment in education for development, and increased aid to education in emergencies by 150% between 2013 and 2016. These contributions provided education for five times as many children as there are primary education students in Norway, supporting over 3.1 million girls and boys, providing 11 million students with learning materials, and training 140,000 teachers. (NORAD, 2017)
  • A single additional year of education yields great economic gains. In some cases, an additional year of education has generated as much as 35% higher GDP per capita and a 10% increase in income, with larger gains for women. (Patrinos & Psacharopoulos, 2013) (UNICEF, 2015)
  • Early childhood education is a sound investment. Investing US$1 in early childhood education can generate returns as high as US$17 for the most disadvantaged children. In sub-Saharan Africa, every US$1 invested in tripling pre-primary education enrolment can generate up to US$33 in returns. (Zubairi & Rose, 2013) (Education Commission, 2016) (Copenhagen Consensus Centre, 2016)
  • Education generates above average financial returns. One US dollar invested in a one-year increase in the average years of schooling attained generates a 10% rate of return in lower-middle-income countries, well above average returns to investment in stocks (4.6%), bank deposits (4.6%), housing (2.8%), and long-term bonds (2.7%). (Psacharopoulos et al., 2016)
  • Educating girls and women is one of the most efficient ways to promote economic growth. Increasing the number of women with a secondary education by 1% could increase a country’s economic growth by 0.3%. (Brookings Institution, 2016)
  • Education has a transformative impact on a country’s economy and future trajectory. Educational attainment explains nearly half the difference in growth rates between East Asia and sub-Saharan Africa over a 45-year period. If Guinea, whose citizens average 3.3 years of education attained, reached Kenya’s average of nine years, its GDP per capita could double. (UNICEF, 2015  GEM, 2016)
  • Education increases income. In Guatemala, each additional school grade that a child completed raised their earnings as adults by 10%. Increasing their reading comprehension test score to the average score raised their wages by 35%. (Behrman et al., 2009)
  • Literacy matters. If all young people acquired functional literacy skills within the next 15 years, middle-income countries would achieve economic gains equivalent to more than eight times their current GDP over the next 80 years. In Pakistan, women with strong literacy skills earn 95% more than those with weak literacy skills. (EFA GMR, 2013) (OECD, 2015)
  • Secondary education provides economic opportunity and raises millions out of poverty. If every child in low-income countries completed secondary school by 2030, income per capita would increase 75% by 2050 and the elimination of poverty would be advanced by 10 years. (GEM, 2016)
  • Increasing enrolment in early childhood education in every low- and middle-income country by 50% would result in an 8-18% return on investment. Early learning programmes can have a return on investment of up to 10:1 for disadvantaged children. (Engle et al., 2007) (Global Business Coalition for Education, 2016)
  • Education has a positive impact on GDP per capita. The estimated impacts vary between studies, but the median value is that one additional year of schooling is linked to an 18% increase in GDP per capita. (UNICEF, 2015)
  • Quality education leads to positive growth scenarios for countries. Recent evidence shows that two growth scenarios – the ‘Latin American growth puzzle’ and the ‘East Asian miracle’ – are almost entirely explained by investment in learning and skills. (Hanushek & Woessmann, 2015)
  • Education is an important source of economic growth. Increased educational attainment, especially for girls and women, accounted for about half of the economic growth in OECD countries over the past 50 years. (OECD, 2012)
  • Education is strongly associated with GDP. Worldwide, each additional year of schooling has been linked to an increase in GDP per capita of around 18%. (UNICEF, 2015)
  • Investment in education can yield high returns. Each dollar invested in education can yield more than US$5 in additional gross earnings in low-income countries and US$2.50 in lower-middle-income countries. (Education Cannot Wait, 2019)
  • Higher education leads to increases in productivity and earnings that feed back to governments through higher taxes. Over a 34-year period in the US, states that invested more in education ended up having higher per-capita income. (Contemporary Economic Policy, 2008)
  • One additional year of school can increase a girl’s earnings by up to 20% – reaping benefits for the girls themselves, their future families and their communities. (EFA GMR, 2013)
  • Educating girls leads to economic growth. Even a 1% increase in the number of women completing secondary education can increase a country’s economic growth by 0.3%. (Brookings, 2016)
  • Educating girls raises earnings. Each additional year of schooling helps a woman increase her wages by about 12%. (Brookings, 2016)
  • Educating girls means they can earn more and have more secure working conditions. Women with good literacy skills in Pakistan earn 95% more than women with weak literacy skills. (EFA GMR, 2013)
  • Mental health services from schools during crises prevent irreversible damage from ‘toxic stress’. Every US dollar invested in social emotional learning interventions in schools can yield a return of US$11. (Education Cannot Wait, 2019)
  • Proper nutrition allows children to learn at the highest rates and realise their full economic potential. Children with good nutrition can increase their future wages by up to 50% and reduce the chance that they will experience poverty later in life by 33%. (Theirworld, 2020)
  • Investing in early childhood education and nutrition yields immense economic gains. Each US$1 invested in early childhood nutrition can generate up to US$18 in economic returns. Solving malnutrition could reap economic benefits 100 times as large as the interventions needed. Conversely, malnourished children who do not meet their developmental potential may forfeit up to a quarter of adult earnings, costing some low and middle-income countries twice their national expenditure on health. (Theirworld, 2020) (Save the Children, 2013)
  • Education raises individual income, especially for women. Each additional year of schooling can raise an individual’s earnings by 8-10%, with larger gains for women. (World Bank, 2018)
  • Providing quality education for all in sub-Saharan Africa would increase productivity and generate significant economic growth. If the region were to realise the highest education and health scores on the World Bank’s Human Capital Index, GDP per worker could increase as much as 250%. (Brookings, 2020)
  • Improving the efficiency of public education spending in sub-Saharan Africa would significantly advance access to education. If spending efficiency for public education in Africa was the same as in Latin America, the primary school completion rate would increase from 79% to 98%. (AfDB, 2020)
  • Providing early childhood education in sub-Saharan Africa yields significant returns. Every dollar spent towards tripling pre-primary education enrolment in the region could yield a return of as much as $33 return on investment. (Copenhagen Consensus Centre, 2016)
  • Educating girls leads to economic growth. Even a 1% increase in the number of women completing secondary education can increase a country’s economic growth by 0.3%. Educating girls to the same level as boys could benefit developing countries to the tune of US$112 billion a year. (Brookings, 2016; UNICEF 2021)
  • Failure to address the learning crisis will significantly affect the future earnings, financial independence, and opportunities of generations of children. An estimated US$10 trillion dollars in lifetime earnings will be lost if urgent action is not taken. (World Bank, 2020)
  • Education is the most effective tool to escape rural poverty. In rural Indonesia, education was the single most important factor in the likelihood a household would escape poverty. Finishing lower secondary school doubled this probability, while simultaneously reducing the chance of returning to poverty by one-quarter. (McCulloch et al., 2007)
Social benefits
  • Education is a strong predictor and driver of social mobility. In Tanzania, workers with primary education were 20% less likely to be poor, and those with secondary education 60% less likely. Contrarily, 82% of workers with less than a primary education lived below the poverty line. (Guarcello et al., 2012)
  • Providing education for all will impact the social mobility of the poorest on a large scale. Securing universal secondary education would lift 420 million people out of poverty, cutting the number of poor globally in half. (UNESCO, 2017)
  • Education alleviates income inequality, a key barrier to social mobility. Education equips children with skills that increase employment opportunities and incomes, raising the most marginalised from the bottom of the ladder. (UNESCO, 2017) (Corak, 2013)
  • Education helps mitigate the chances of reduced social mobility. In Indonesia, one additional year of school decreased the probability of falling back into poverty by 25%. (EFA GMR, 2013)
  • Higher education is a ticket to increased social mobility. A child born into the poorest quintile who obtains a college degree is one-third less likely to remain in the poorest quintile, and 15% more likely to reach the richest quintile, compared with a child in the poorest quintile who does not obtain a college degree. (Haskins et al., 2008)
  • Social mobility is good for economic growth. If social mobility were increased by 10% globally, economic growth would increase by almost 5% over the next decade. (World Economic Forum, 2020)
  • Increased investment in quality early childhood education sets a fair playing field and expands social mobility. Increasing the educational effectiveness of early childhood programmes would have a greater impact on increasing social mobility than simply increasing attendance, with benefits that outweigh the costs. (Barnett & Belfield, 2006)
  • Education deters boys from early entry to low-skilled work. Direct familial and societal pressure and a prevalence of low-skill job opportunities puts pressure on boys to join the labour force at an early age, leading to early withdrawal from school. Young men who have completed early secondary education reported greater job security and choice, earnings, happiness, and health in comparison to those who had left school earlier. (Ahmed, 2011, Jha & Kelleher, 2006) (International Labour Organization, 2006)
  • Reducing child marriage provides savings for education. In Niger, the country with the highest prevalence of child marriage, ending child marriage and early child birth in 2015 would have created US$327 million in savings to the education budget by 2030. (World Bank, 2017)
  • Providing education and eliminating child labour is good social and economic policy. Eliminating child labour and implementing universal education would deliver benefits seven times greater than the costs. (ILO, 2004)
  • Financing education can reduce carbon emissions. Closing the education financing gap in low- and lower-middle-income countries could reduce emissions by 51.48 gigatons by 2050. (GEM, 2020)
  • A better educated labour force is essential to ensuring the technological transformation required to combat climate change. Education provides the basic, technical, and managerial skills necessary to innovate and develop green industries, transforming economies and food systems, and reducing environmental destruction. Green growth could produce up to 60 million additional jobs globally. (Technopolis Group, 2015) (ILO, 2012)
  • Early childhood interventions lead to significant individual benefits later in life. In Jamaica, early childhood interventions in the cognitive and socioemotional development of stunted children aged 9-24 months old led to lower crime rates, better mental health, and 25% higher earnings 20 years later, compared to children not receiving any intervention during early childhood. (World Bank, 2018)
  • Early childhood education and increased childcare availability helps parents, especially mothers, re-enter the workforce. A low-cost, universal childcare programme in Quebec increased labour force participation by 12.3%. (MacEwan, 2013) (Lefebvre & Merrigan, 2005)
  • Education reduces crime and increases earnings. A US study calculated that a five percentage point increase in male high school graduation rates would have nearly US$20 billion in total benefit to the US economy via reduced crime and higher earnings. (DeBaun & Roc, 2013)
Funding
  • Private giving in the form of remittances can have a substantive impact on education – and lowering the cost can significantly increase resources for education. Remittances increased education spending by up to 35% across 18 countries in sub-Saharan Africa and Asia. Lowering the cost of remitting by 4% would provide households with an extra US$1 billion a year to spend on education. (GEM, 2019)
  • New innovations in finance can multiply philanthropic investments. The new International Finance Facility for Education leverages donor funding, unlocking four US dollars of additional investment for every dollar contributed. (Education Commission, 2018)
  • New, innovative platforms and channels are needed to increase philanthropic giving to education – and there is appetite from investors. There is growing interest in expanding the use of innovative financing mechanisms, which can mobilise and leverage new and additional sources of finance for education and improve effectiveness and accountability. Just 2% of all impact investments are in education, but 22% of investors plan to increase their investments in the sector. (Global Development Incubator)
  • Education has the potential to tap into innovative financing and impact investing. The health sector has successfully utilised these channels, raising US$7 billion through innovative financing since 2000, in comparison to US$500 million in education funding. (Global Development Incubator, 2014) (Bellinger et al., 2016)
  • High net worth individuals can be powerful catalysts of change in education. Key figures in global health have been instrumental in restructuring aid and building coalitions to leverage funds at scale. (KFF, 2020)
  • Education in sub-Saharan Africa is a smart business investment. By 2060, the populations of Africa’s two most populous nations, Nigeria, and Ethiopia, will have tripled and doubled, respectively. Companies investing in the education of emerging markets like these will not only create the skilled workforce needed to address the global talent gap, but also capture the economic benefit of the resulting newly empowered consumer base. (Brookings, 2013)
  • More and more businesses are playing an active role in education. In a study of 250 companies, 28% of total corporate philanthropic giving went to education programmes, making it the number one cause that businesses supported. (CECP, 2018)
  • Corporate support for education can have a greater social impact if it is better coordinated. Although US Fortune 500 contributions to global education were reported to be small, short term, uncoordinated and not reaching the most marginalised, the total contribution was not negligible at just shy of US$500 million. This is equivalent to about two-thirds of the entire United States Agency for International Development (USAID) education budget. (Van Fleet, 2011)
  • Global Fortune 500 companies invest a lot in education. It is estimated that of the US$20 billion per year spent on corporate social responsibility initiatives, US$2.6 billion was spent on education-related activities. (Varkey Foundation, 2015)
  • Education anchors investments in all sectors, but corporate giving to global health is 16 times what it is to education. US foundations decreased their share of funding for education by 3% between 2005 and 2015, while increasing their financing for health by 5%. (GBCE, 2013) (International Commission for Financing Global Education Opportunity, 2017)
Skills and jobs
  • Education spending is more effective at job creation than tax cuts. A study found that spending on education created almost twice as many jobs as would be expected from tax cuts of equal value and also resulted in better paying jobs. (Pollin et al., 2009)
  • Better educated individuals are more resilient in the labour market. In the US, unemployed workers with at least a high school degree are 40% more likely to find a job again within one year compared with those who did not complete high school. Each additional year of schooling increases the chance of re-employment by about 6-7 percentage points. (Riddell & Song, 2011)
  • Most of the new jobs created in the previous economic recovery went to college-educated workers. After the 2008 recession, jobs for college graduates in the US sharply rebounded and increased by 8.4 million, but jobs for those with a high school diploma or less only increased by only 80,000. (Carnevale et al., 2016)
  • Investment in education is urgent to meet future skills demand. It is estimated that 42% of core skills required for existing jobs will have changed by 2022. By 2030, more than half of youth worldwide will not have the necessary skills for what the workplace of the future requires. (Education Commission, 2016) (World Economic Forum, 2020)
  • Investment in STEM education and jobs will boost recovery. Cities with more STEM workers tend to have higher job growth, employment rates, patent rates, wages, and exports. In the US, for each high-tech job added, an additional five jobs are created. (Moretti, 2013) (Rothwell, 2013)
  • Innovation is almost exclusively accomplished by those with advanced degrees. In the US, more than 90% of patent holders have at least a bachelor’s degree, and 70% have at least a master’s degree. If Finland had not invested substantially into engineering education in the postwar era, the number of US patents obtained by Finnish inventors is likely to have been 20% lower. (The Hamilton Project, 2017) (Toivanen & Väänänen, 2016)
  • An educated and skilled workforce is key to growth and technological progress. Data from 19 OECD countries between 1960 and 2000 show that their growth was more driven by skilled human capital rather than the total human capital of the workforce. (Vandenbussche et al., 2004)
  • In the US, virtually all growth in the labour force over the next 40 years is predicted to come from immigrants and their children. It is essential that this group is provided with a high-quality education to maintain economic growth. (Passel, 2011)
  • Education of immigrants provides immense benefits to the host communities. Educated refugees with good qualifications have a better chance of finding work and contributing to the economy of their host country, contributing to stability at a local, national, and regional level. (UNHCR, 2016)
  • Education is an important asset to securing formal employment. In developing countries, the share of informal employment decreases from 93.9% for workers with no education, 86% for those with primary education, 59.1% for those with secondary education, and only 32% for those with tertiary education. (ILO, 2018)
  • Higher levels of education reduce employment vulnerability. In 27 low- to upper-middle income countries, eight out of 10 young people with a higher education degree were in non-vulnerable employment. (Sparreboom & Staneva, 2014)
  • Education increases the chances of obtaining stable, secure work. In rural El Salvador, 7% of workers without a primary education have a secure, working contract, in contrast to nearly half of those with a secondary education. (EFA, 2014)
  • Education can reduce intergenerational poverty in rural households. In rural Nicaragua, chronic poverty was 21% less likely when household heads had at least six years of education. In rural Senegal, boys with educated mothers were nearly one-third more likely to find higher paying employment outside of agriculture. (Stampini & Davis, 2006) (Lambert et al., 2011)
  • Education boosts income and access to better jobs for those living in rural areas, particularly for girls. A young rural woman with a secondary education has a 10% greater chance of accessing higher paying and more stable wage labor. Young rural women are twice as likely as young rural men to neither work nor attend school. (IAFD, 2019)
  • Education empowers rural families to diversify their income, building flexibility and resilience, and increasing earnings. In rural India, 17% of women with no education work outside of agriculture, compared to 72% of women with a secondary education. (EFA, 2014)
Equity
  • Prioritising education for the most marginalised provides the highest returns. Financing primary and early childhood education, and the education of the poorest, the disabled, and those with social disadvantages, is the quickest route to achieving equity, with the greatest potential social dividends. (Education Commission, 2016)
  • Providing equitable education is an important driver of national economic growth. More equal access to education reduces income inequality and poverty, offering all segments of society more equal economic opportunities. If education inequality in sub-Saharan Africa had been halved, the annual per capita growth rate would have increased nearly 50% over a five-year period. (EFA GMR, 2013)
  • Closing the skills gap unleashes economic potential. If education systems successfully address the skills gap for the future of work, as much as US$11.5 trillion could be added to global GDP by 2028. (Accenture, 2018)
  • Education integrates refugees into the local economy. Among refugees in Germany, good German speaking, reading and writing skills were associated with a 19% higher probability of employment and 18% greater wages. (Hanemann, 2018)
  • When people with disabilities receive higher levels of education, their household is less likely to live in poverty. In low- and middle-income countries, for each additional year of schooling that an adult with a disability acquires, the likelihood that their household belongs to the two poorest quintiles falls by 2-5%. (International Disability and Development Consortium, 2016) (Filmer, 2008)
  • Early disability-inclusive education is a great investment with strong economic and life-changing benefits. Early identification and intervention can lead to long-term gains in higher academic performance and increased chance of graduating school. (Hayes & Bulat, 2017) (Heckman & Masterov, 2005)
Teaching and learning
  • Investing in quality teachers is a smart investment. A teacher in the top 15% produces over US$400,000 in added income for her class of 20 students through their future earnings. In the US, replacing the bottom 5% of teachers with average teachers has a present value of US$100 trillion. (Chetty et al., 2010)  (Hanushek, 2010)
  • Higher educational attainment is associated with increased financial literacy. Women with less education displayed disproportionately lower levels of financial knowledge in all stages of life, from youth to old age. (Hasler & Lusardi, 2017) (GFLEC Testimonies, 2013)
  • Citizens who are financially literate are more empowered to make wise economic choices. People with financial literacy skills are more likely to plan for their retirement, and avoid risky financial behaviours such as carrying high-interest debt or entering into unfavourable loan agreements. (Lusardi & Wallace, 2013) (Lusardi & Tufano, 2009)
  • Financial literacy helps households make the most out of remittances. Remittances raised spending on education over 50% in Latin America and over 35% in Africa and Asia. (GEM, 2019)
  • Financial literacy helps individuals and families save money and plan for the future. Migrants who received financial training were more inclined to create a budget and had double the savings of those who did not participate in the training. (World Bank, 2017)
  • Financial education safeguards vulnerable populations from exploitation. A financially literate migrant or refugee is less likely to be taken advantage of through scams or exorbitant fees. (GEM, 2019)
  • Formal schooling is a practical pathway to developing financial literacy. Just one in three adults has a basic understanding of financial concepts, and only a fraction of young people have access to financially literate parents or adults to learn from. (Hasler & Lusardi, 2017) (GFLEC Testimonies, 2013)
  • Financial literacy raises earnings. Women with high financial literacy skills received 95% more income than women with little or no literacy skills. (EFA GEM, 2014)
  • Financial literacy is a necessary skill for today’s youth to successfully analyse, reason, and navigate the complexities of the world. Acknowledging its importance, financial literacy has been added to the topics now evaluated through the Programme for International Student Assessment (PISA) examination, alongside maths, science, and reading. (GFLEC Testimonies, 2013)
  • Education increases entrepreneurship and economic opportunity. A sound understanding of financial mechanisms, management, and concepts like interest compounding, exchange rates and fee structures diversify and boost economic opportunity. (Atkinson & Messy, 2015)
  • Learning traditional numeracy skills is a direct bridge to financial literacy with real world impact. In Somalia, teachers worked to address specific skills gaps by connecting numeracy to financial literacy and business development in primary school lessons. (CARE International, 2016)
  • Financial literacy is important in rich and poor countries. Just over one in 10 15-year-olds across participating OECD countries are able to solve difficult financial tasks. (GFLEC, 2015)

Key opinions

picture of Norwegian prime minister Erna Solberg

Education, especially for girls, is the best investment we can make for sustainable development. Gender equality is a human right and it is also smart economics. It is therefore crucial that we continue our efforts to secure education for all in the midst of the Covid-19 pandemic.

Erna Solberg, Former Prime Minister of Norway
Guy Ryder

Education and training are the keys to unlock opportunities for women and men to gain employment, launch businesses and create better lives for themselves and their families. As we work to build a better and more resilient future after the Covid-19 pandemic, we must ensure quality education systems that are accessible to all.

Guy Ryder, ILO Director General
kristalina georgieva

Safeguarding our post-pandemic future means safeguarding our human capital. More than a billion learners across the world have been affected by the virus-related disruption to education. That is why we need more investment—not just spending more on schools and distance-learning capacity, but also improving the quality of education and the access to life-long learning and re-skilling. These efforts can pay large dividends in terms of growth, productivity, and living standards. We can build a more resilient world by harnessing the vast potential that education provides for people to learn, grow, and transform their lives.

Kristalina Georgieva, Managing Director of the IMF

Prefer an audio medium to better understand the connection between education and economics? Listen to Theirworld’s Better Angels podcasts, featuring stories from globally renowned campaigners, Nobel Prize winners, celebrities, politicians and remarkable young people who are experts in the field.

Gordon Brown and Liesbet Steer Interview Special

In this Better Angels interview special guest host Tom Fletcher speaks to former UK Prime Minister and UN Special Envoy for Education Gordon Brown and Director of the Education Commission Liesbet Steer about the new International Finance Facility for Education (IFFEd).

Better Angels is live from the UN Supporting the future of Syria and the region conference in Brussels


In this episode, you will hear from Christos Stylianides, the European Commissioner for Humanitarian Aid and Crisis Management, Jean-Louis De Brouwer, Director of Operations in the European Commission’s Humanitarian Aid and Civil Protection department and Yasmine Sherif, Director of Education Cannot Wait (ECW) – a global fund to transform the delivery of education in emergencies.

20th Anniversary Special #3: How do you forge powerful partnerships?


Hear from Maysa Jalbout, Senior Advisor on Education in Emergencies for Theirworld, about her work supporting and financing refugee education in Greece. Maysa is joined by Elias Bou Saab, former Lebanese Minister of Education, who collaborated with Theirworld on the double shift school system in Lebanon, which has helped provide education for more than 300,000 refugee children.

How Do You Solve a Problem like… Refugee Education?


How do you actually make big change happen? Sarah Brown explores all of the elements involved in getting hundreds of thousands of Syrian children back in school in learning through interviews with Elias Bou Saab, former Minister of Education in Lebanon, Christos Stylianides, EU Commissioner for Humanitarian Aid and Crisis Management, Julia Gillard, former Australian Prime Minister, now Chair of the Global Partnership for Education, Dr Justin van Fleet, Director of the Commission for Financing Education Opportunity and chief adviser for Theirworld.

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