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Investment in education: the implications for economic growth and public finances - Andrea Montanino, Bartosz Przywara and David Young

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  • Andrea Montanino
  • Bartosz Przywara
  • David Young

Abstract

This paper analyses the demographic and institutional influences underlying public spending on education, as well as the consequences for average educational attainment and economic growth. The issues are topical given, on one hand, EU objectives for increased investment in human resources and, on the other, increasing concerns about the sustainability of public finances, particularly in view of ageing populations. The paper presents methodologies for projecting educational attainment and public expenditure on education. Tentative numerical results suggest that the growth of average educational attainment is likely to slow slightly, compared to recent decades. Nevertheless, education is set to continue making a substantial contribution to economic growth in the EU as a whole, though the impact varies widely among Member States. As regards public expenditure, although demographic trends mean a reduction in the potential number of students, this is offset by two factors: increasing enrolment rates at upper-secondary and tertiary level (projected taking into consideration either past developments in enrolment or the expected future evolution of labour force); and increasing expenditure per student (projected on the basis of recent trends). Thus, few savings - if any - are expected from reductions in expenditure on education due to changes in the demographic structure.

Suggested Citation

  • Andrea Montanino & Bartosz Przywara & David Young, 2004. "Investment in education: the implications for economic growth and public finances - Andrea Montanino, Bartosz Przywara and David Young," European Economy - Economic Papers 2008 - 2015 217, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:ecopap:0217
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    Cited by:

    1. Manabu Nose, 2017. "Estimation of drivers of public education expenditure: Baumol’s effect revisited," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(3), pages 512-535, June.
    2. Christine Erhel & Iain Begg & Jorgen Mortensen, 2010. "Medium term employment challenges of the Lisbon strategy," Post-Print hal-00616806, HAL.
    3. Christine Erhel & Iain Begg & Jorgen Mortensen, 2010. "Medium term employment challenges of the Lisbon strategy," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00616806, HAL.
    4. Díaz-Giménez, Javier & Díaz-Saavedra, Julián, 2006. "The Demographic and Educational Transitions and the Sustainability of the Spanish Public Pension System," MPRA Paper 69287, University Library of Munich, Germany.
    5. Alina Ștefania CHENIC (CREȚU) & Alin Ioan CREȚU & Laurențiu TEȘCAN, 2018. "A Long Term Analysis of Two Undeniable Realities of the XXI Century - Global Economic Crisis and Demographic Aging," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 19(2), pages 196-212, May.
    6. Zenon Jiménez-Ridruejo Ayuso & Carlos Borondo Arribas & Julio López Díaz & Carmen Lorenzo Lago & Carmen Rodríguez Sumaza, 2009. "El efecto de la inmigración en la sostenibilidad a largo plazo del sistema de pensiones en España," Hacienda Pública Española / Review of Public Economics, IEF, vol. 188(1), pages 74-121, March.

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