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Last Updated:
Nov 27, 2009 - 9:06:25 AM |
Germany wastes enormous growth potential due to inadequate education; Every fifth 15-year-old does not get beyond elementary school
By Finfacts Team
Nov 27, 2009 - 8:59:12 AM
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Germany wastes an enormous growth potential due to its inadequate education system and every fifth 15-year-old does not get beyond the elementary school level today.
The costs of inadequate education in terms of unachieved economic growth summed up over the coming eighty years - - the lifespan of children born today - - is about €2.8 trillion. The long time span and total cost estimate brings to mind the famous remark of renowned British economist, John Maynard Keynes, who said the long-run is when we are all dead.
The Ifo Institute for Economic Research, at the University of Munich was asked to study the impact of the education system by the Bertelsmann Foundation - - the majority shareholder of Bertelsmann AG, a global media corporation with more than 106,000 employees in more than 50 countries. Founder Reinhard Mohn commented on his motivation for establishing the organisation in 1977: "I knew the frustration that every citizen of a democracy must feel when society does not function as it should -- and I wanted to do my part to improve the situation...."
In the current study, educational economist Ludger Woessmann calculates the discounted yields of an education reform that clearly reduces the number of "risk pupils." In this way, the long-term economic effects of education can be calculated for the first time.
Approximately 20 percent of all 15-year-olds in Germany are poorly educated "risk pupils." According to the OECD Programme for International Student Assessment (PISA) studies, they are at best only able to read and do maths at an elementary school level and have therefore considerable problems in entering the labour market. In his study Woessmann posits an education reform that clearly lowers the share of risk pupils within the coming ten years. He then calculates the additional growth effects achieved by this reform over the coming eighty years.
"With a perspective that looks far into the future, the Bertelsmann Foundation has entered new education-policy territory," Dr. Joerg Draeger, executive board member of the Bertelsmann Foundation, said. Analogous to the climate discussion, a long-term horizon is also necessary in education: "Education reform needs several decades until its effects are completely felt in society and on the labour market. For this reason the reform effects must be assessed on a long-term basis."
According to the calculations of the study, the benefits of a reform up to 2030 would amount to €69 billion, which exceed the annual public education costs for elementary and middle schools. Up to 2074 the additional growth would sum up to ca. €1.75 trillion, which is about the level of the current German national debt. In 2090 finally - - the end point of the long-term horizon - - the benefits amount to €2.8 trillion. This is more than Germany's present annual GDP and is 28 times higher than the current economic stimulus packages.
The study says federal states would profit from a reform very differently depending on their population size and their present share of risk pupils. North-Rhine Westphalia, for example, the most highly populated federal state with a currently relatively high share of risk pupils, could achieve additional GDP of about €790 billions up to 2090.
"The study illustrates how urgent it is to solve the problem of inadequate education", Draeger stresses. The risk pupils frequently come from socially disadvantaged families or have a migration background. "Education must create equal opportunities," says Draeger. "Only then can it safeguard both social cohesion and our economic future. All policy-makers must realize: Education is profitable - also in financial terms."
"Education is a long-term and lasting investment in the future of our society," Draeger says. It is essential to begin the reforms as soon as possible: "Any further delay of effective reforms is expensive, as also shown in the study.
Ifo educational economist Ludger Woessmann commented:"The costs of doing nothing and of ineffective measures are horrendous if one looks at the long-term growth effects of education investment. For this reason, sustainable education policies require a long-term horizon similar to that for climate policies."
The report in German.
Bertelsmann Foundation German language site has information on the report.
The English language site will likely also have an update.