Evidence on the Poverty-Reducing Effect of Education and Training - Essay Example

EDUCATION AND CHILD POVERTY Introduction This paper will review the economic literature in relation to the potential of the role ofeducation and skills in reducing child poverty. It will be done in relation to the people who are still in schools and are not parents yet. It is also done in relation to adults who participate in life-long learning. It is important to note that the most common cause of poverty is unemployment (Nickell 2004). It is only natural for a social science researcher to investigate what education does in increasing the chances of someone being employed. Another cause of adult and child poverty is the large amount of work with very little pay. The review includes three parts. There is the literature reviewed on the effects of education in eradicating poverty. The second part will review literature on improving the outcomes of adults and the outcome on the lives of children. The last part will review literature on the benefits and effects of education. It will investigate the impact of education on an individual’s work. The last part of the review will include the conclusions drawn from the review. In most countries, it is a fact that education will increase the chances of someone securing employment. The level of education largely determines the wages that one will be able to get. Government policies determine largely what the families will be able to attain. The government is allowed to intervene on the various measures that the income can have. For instance, the government can reduce the amount of taxes that families below a certain pay grade can attain. The cost of reducing poverty among children through education is very high. It is more sustainable to think of education as a long-term goal where people are educated from a young age so that it becomes part of the culture. 1. Evidence on the poverty-reducing effect of education and training 1.1. Wage returns There is a lot of evidence that more years of schooling results in higher wages. The most recent focus on this issue is that there is the same degree in the level of education and the returns. Academic qualifications enable an individual to earn much more than any type of vocational training (Dearden et al. 2002) and (Sianesi 2003). The main point is to differentiate between the causative influences of qualification from any other type of qualification that may not be considered. According to Blundell et al. (2005), it is important to distinguish individuals who earn a higher salary because of their academic qualifications and individuals who choose to continue their education because of their well-paying jobs. This will be dealt with by trying to establish the causative issue and which factor causes another factor. One strategy that will be used is to investigate siblings who grow up in the same environment, and this eliminates the differences in family setting. Several studies help to investigate the policies of the schools and the way that the government organizes the school system. (Card 1999). When an individual is studying a course, they have to consider the market of the particular course and the effects that the course will have on the outcome of employment. In essence, literature that is of most interest is that which has the benefits of education as a poverty reducing factor and which type of studies will likely help a person to get the most favorable jobs. One of the most common studies is by Harmon and Walker (1995) who insist on making students stay in school for longer till they are allowed to finish school. The intervention is aimed at ensuring that individuals have the same level of education at a particular time and that they have the same edge in the market. This will in turn reduce the effects of poverty. They estimate that there is an increase in the wages by 15% for every additional year that one spends in school. Another recent study, Dearden et al. (2004a) estimates that a person who leaves school at the age of 18 will be able to get a better job than a person who leaves school at the age 16. The analysis shows that women and men who come from poor families would have benefited from education if they had stayed longer in school. They would have been able to earn higher incomes. When considerations are placed on the higher study, then higher wages would be a result of the higher education. Returns for the people for low and high incomes are 23-24% for males. Women who invest in higher education get returns of between 22-23% regardless of the income group that they are in. People who are from disadvantaged groups can be able to earn as much as those who are at an advantage. The issue of having educational inequality in work groups has been of major concern (Blanden et al. 2005). If this trend continues to rise, then people will be getting income that correlates with their level of study. However, even though the returns of education in the lower income group are very high, it does not mean that there has to be returns for every qualification. McIntosh (2004) uses the recent happenings in analyzing the impact of other vocational training in the labor market. It is rather evident that students who come from high income groups will be able to attain better grades than those in low income group families. They perform better since they have access to better schools and resources. 1.2. Employment Even though vocational trainings that are considered low do not have high wage returns, McIntosh (2004) suggests that they give a probability of increasing the chances of a person getting employed. The chances of them getting employment are much higher than the people who leave school without any training. For instance, men who have no training in any formal course have an employment rate of 68. Vocational training has the capability of increasing the employability to more than 75%. There is a major improvement to those who further advance their training to the next level. The improvement is noted to about 89%. If an individual takes their training to level 3, then they increase their chances of obtaining employment to 94%. Coelli et al. (2004) used Canadian statistics to derive the fact that graduation in high school has high impact on the probability that one is going to attain employment. It seeks to suggest that individuals who have been on welfare for a long time will continue relying on welfare from the ages of 19-24. Additionally, when a person acquires even very low levels of literacy, then they can make a huge difference on how they will be employed (McIntosh and Vignoles, 2000). It is rather obvious that education largely increases the chances of someone attaining employment and thus eradicating poverty. 1.3. Social outcomes Returns in terms of higher wages to individuals are only one side of the story whereby it affects the kind of life that the individual will lead. The level of education determines the well-being of the individual and the kind of life that they will live. It also affects the type of people that the individual will be able to interact with. By investing in education, a person increases the chances of mingling with great people in society through their social interactions. People with high levels of education are held in high regard as compared with people with low levels of education, researchers in social science have linked the benefits of education in the entire life of the individual. They have researched on issues such as crime, level of health, level of engagement to civic issues and the impact on the future generations. Evidence indicates that benefits of education surpass just the employability factor. It places one at an advantage. For instance, a person with high level of education will have better health since they can afford to go to the best hospitals (Grossman and Kaestner 1997, Kitagawa and Hauser 1973, Lleras-Muney 2005). When a person has high level of education, they are not likely to get involved in crime (Lochner and Moretti 2004, Feinstein and Sabates 2005, Machin and Vujic 2005). Education increases the chances of one having participation in civic duties (Brehm and Rahn 1997, Bynner and Egerton 2001, Bynner and Parsons 1997). Furthermore, it helps in ensuring that their children have the best education (Black, Devereux and Salvanes 2005). 2. Benefits to children of improving adult outcomes As discussed above, education has the potential of improving the life of an individual by increasing the chances of them getting employment. As it increases the chances of getting employment, it means that it will reduce the incidence of child poverty. It is necessary to understand the effects of increase in incomes in the long term especially on children and the parents. This is the only way that future generations will be absolved from all the poverty. A number of studies have shown the effect of income on the outcomes of the children. There are studies that also differentiate the effects of parental education on how the children will turn out. There are various ways that income can affect the outcome of children. The amount of income will determine the quality of childcare that they are going to receive, the environment in which they will be raised, the social activities that they will participate in, the neighborhoods that they will live in and the schools that they are going to attend (Blanden and Gregg 2004). An issue of contention is whether the size of a family’s income is of importance or whether one can blame low leels of education on other factors other than income. Mayer (1997) argues that it is not only income that determines how children will turn out but rather the factors that cause the parents to have a low income. The major challenge is to distinguish between the causal effects of education and education standards on the outcome of the child. Other factors influence the outcome of a child. The factors include genetical and environmental factors. It is common for people from a high income groups to perform better in education than for those in lower income groups By putting the outcomes of children in consideration, Blow et al. (2004) provides a summary of methodological problems and evidence that is given to support their claims. They comment the there is no enough evidence to support that children will have better outcomes as a result of an increase in the incomes of the families. A lot of the evidence is derived Haveman and Wolf (1995) and Mayer (1997). One of the most important findings is that the effect of the current income in the life of a child is very small and the effect of a permanent income is of more concern. This is however not constant as other factors come into play. It is however, not clear on what variables to use or exclude when researchers are investigating the effect of income on the way a child will turn out. The effects of a permanent income mean that he child will have a more stable life as compared to the one that is always changing. There is likely to be more effects on a child when a low income family experiences an increase in income. It is not possible to determine the independent effects of employment, income and education on the way that the child is going to turn out. All the factors are intertwined, and all of them contribute either directly or indirectly. Recent studies on the effect of income on the outcomes of the child use a variety of methods to find out the relationship between family income and the decision by a child to continue with their studies after the age of 16 (Blanden and Gregg 2004). Generally, the findings conclude that there is a consistent impact of education on the outcome of a child and this is evidenced by the inequalities in education attainment by different individuals. The findings postulate that there is an increase in a child’s performance if there is an increase of about 30% of the income (Chevalier et al. 2005). Permanent income is also very important in ensuring that children get education up to the age of 16. Researchers have tried to separate the effects of education on income as they postulate that incomes determine the kind of education that children will attain. Benefits and effects of education Lavy (2002) evaluates the group incentive program where he bases his arguments on providing schools with more resources such as increasing the time that teachers will spend on teaching, providing the students with more coaching, splitting larger classes so that students can get more specialized treatments and the attention of teachers and better school facilities. He suggests that the effect of increasing resources is much higher than the effects of increasing income. Many programs to encourage students in the United States have failed to have any impact in the teenagers as they continue to drop out of school before graduating (Dynarski and Gleason 1998). The biggest share of grants to help in combatting the rise of children dropping out of schools was used to restructure the schools but the outcome was negligible. Van der Klaauw (2005) investigates the biggest federal programme which is title one of elementary and secondary education Act of 1965. The law provides financial assistance to local agencies that meet the educational needs of students with disabilities and special needs. He uses the declining random design to enable a comparison between control and treatment schools in the state of New York over the last ten years. Even though the funding was the same as those that were used in Israel, the programme was not as successful in the United States as it was in Israel. The reason as to why it was not successful is that the local authorities managed to divert other funds from the schools. Another reason could be that students were given special treatment compromising their regular classes. The regular classes are claimed to have been taken over by inexperienced teachers. It was not done in the same way that it was done in Israel where the extra classes were given after the regular classes had been finished. The other reason was that the funding was too little for the huge number of schools. The problem of using the resources was discussed by Bénabou et al. (2005) where he related the same programme used in France. It was named Zones d’Education Prioritaire (ZEP – Priority Education Zones) in France and it was launched in the year 1982.was launched in 1982. The aim of the programme was to help the schools to get better resources especially those in disadvantaged areas. The problem with the programme is that it seemed to stigmatize some schools. A lot of money was wasted through teacher’s compensation instead of helping the students. There was very poor allocation of resources and there were a lot of doubts from both teachers and parents. Conclusion Education is a very important tool when dealing with poverty in the long run. The study indicates that there is a way in which people can do better economically as a result of education. Education increases the chances of an individual attaining employment. It is very hard to help people who dropped out of high school. The study suggests that there are better ways of dealing with school dropouts through programmes. However, the programmes have to be run very well so that they are effective. It is important for a country to have a long term solution in regards to education and in helping to eradicate poverty. It is important for the people to realize that educational and social policies go hand in hand. The discussion in this paper makes it clear that education is an important tool in dealing with future and current poverty issues. Education helps an individual in securing employment that pays well and greatly affects the kind of life that they will live. If a country aims to eradicate poverty completely, then they have to come up with ways of promoting education in their countries. Education is the tool which people from low income families can secure a better life for themselves. If parents are not able to secure good education for their children, then it means that there children will be poor as well and it will be a never- ending cycle. References Abramovsky, L., Battistin, E., Goodman, A. and Simpson, H. 2004. The impact of ETP on the take-up of training among employers: Year 1 report, London: Department for Education and Skills. Angrist, J., and Lavy, V. 2002.The effects of high school matriculation awards: evidence from randomized trials, National Bureau of Economic Research (US) Working Paper, No. 9389. Behrman, J.R. and Rosenzweig, M.R. 2002. Does increasing women’s schooling raise the schooling of the next generation? American Economic Review, Vol. 91, No. 1, pp. 323-334. Bénabou, R., Kramatz, F., Prost, C. 2005. The French Zones d’Education Prioritaire: much ado about nothing? Paris: CREST-INSEE, mimeo. Black, S.E., Devereux, P.J. and Salvanes K.G. 2005. 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An in-depth analysis of the returns to National Vocational Qualifications obtained at Level 2, London: Centre for the Economics of Education, Discussion Paper, No. 46. Haveman, R. and Wolf, B. 1995. The determinants of children’s attainments: a review of methods and findings, Journal of Economic Literature, Vol. 23, pp. 1829-1878. Lavy, V. and Schlosser, A. 2005. Targeted remedial education for under- performing teenagers: costs and benefits, Journal of Labour Economics, forthcoming. McIntosh, S. 2004. The impact of vocational qualifications on the labour market outcomes of low-achieving school-leavers, London: Centre for Economic Performance, Discussion Paper No. 621. Nickell, S. 2004. Poverty and worklessness in Britain, Economic Journal, 114, C1-C25. Sianesi, B. 2003. Returns to education: a non-technical summary of CEE work and policy discussion, London: Institute for Fiscal Studies, mimeo. Van der Klaauw, W. 2005. Breaking the link between poverty and low student achievement: does Title 1 work? Chapel Hill: University of North Carolina at Chapel Hill, mimeo. Read More