Lorraine Dearden

The Impact of Training on Productivity and Wages: Evidence from British Panel Data

It is standard in the literature on training to use wages as a sufficient statistic for productivity. But there are many reasons why wages and productivity may diverge. This paper is part of a smaller literature on the effects of work-related training on direct measures of productivity. We construct a panel of British industries between 1983 and 1996 containing training, productivity and wages. Using a variety of econometric estimation techniques (including system GMM) we find that training is associated with significantly higher productivity. Raising the proportion of workers trained in an industry by one percentage point (say from the average of 10% to 11%) is associated with an increase in value added per worker of about 0.6% and an increase in wages of about 0.3%. Furthermore, we find that the magnitude of the impact of training on wages is only half as large as the impact of training on productivity, implying that the existing literature has underestimated the importance of training. We also show evidence using complementary datasets (e.g. from individuals) that is suggestive of externalities of training and imperfect competition.

The Returns to Academic and Vocational Qualifications in Britain

This paper uses data from the 1991 sweep of the National Child Development Study (NCDS) and the 1998 Labour Force Survey (LFS) to provide a comprehensive analysis of the labour market returns to academic and vocational qualifications. The results show that the wage premia from academic qualifications are typically higher than from vocational qualifications. However, this gap is reduced somewhat, when we control for the amount of time taken to acquire different qualifications. This is particularly important for vocational courses, which generally take shorter time periods to complete. In the paper we also investigate how returns vary by gender, subsequent qualifications, and the natural ability of individuals. Finally, by comparing the NCDS results with those from the LFS, we estimate the bias that can result from not controlling for factors such as ability, family background and measurement error. The results reveal that the estimated returns in the NCDS equations controlling for ability, family background and measurement error are similar to the simple OLS estimates obtained with the LFS, which do not control for these factors. This suggests that the biases generally offset one another.

Conditional Cash Transfers and School Dropout Rates

This paper evaluates a United Kingdom pilot study designed to test whether a means-tested conditional cash transfer paid to 16- to 18-year-olds for staying in full-time education is an effective way of reducing the proportion of school dropouts. The transfers impact is substantial: In the first year, full-time education participation rates increase by around 4.5 percentage points while the proportion receiving two years of education increases by around 6. 7 percentage points. Those receiving the full payment have the largest initial increase in participation and some evidence is found suggesting that part of the effect can be explained by liquidity constraints.

The effects of families and ability on men's education and earnings in Britain1

Abstract The paper estimates the returns to education for a cohort of men born in Britain in March 1958 who have been followed since birth until the age of 33. The data used has a wealth of information on family background including parental education, social class and interest shown in the childs education as well as measures of ability. These variables are typically missing in studies looking at the returns to schooling. In the paper, we find that the average return to an additional year of full-time education for the UK men is somewhere around 5 1/2% to 6% even after correcting for the effects of measurement error. The paper also presents evidence that the returns to an additional year of schooling in the UK are heterogeneous. In particular, the paper finds some evidence that men with lower tastes for education, have significantly higher marginal returns to education. The results of the paper suggest that recent IV estimates of the returns to schooling in the UK, which exceed typical OLS estimates, may overestimate the average marginal return for the population of men as a whole.

Higher Education Funding Reforms in England: The Distributional Effects and the Shifting Balance of Costs*

This article undertakes a quantitative analysis of substantial reforms to the system of higher education (HE) finance in England, first announced in 2004 and revised in 2007. The reforms introduced deferred fees for HE, payable by graduates through the tax system via income-contingent repayments on loans subsidised by the government. The article uses lifetime earnings simulated by the authors to consider the likely distributional consequences of the reforms for graduates. It also considers the costs of the reforms for taxpayers, and how the reforms are likely to shift the balance of funding for HE between the public and private sectors.

Economics of education research: a review and future prospects

In this paper we offer an appraisal of the economics of education research area, charting its history as a field and discussing the ways in which economists have contributed both to education research and to education policy‐making. In particular, we highlight the theoretical and methodological contributions that economists have made to the field of education during the last 50 years. Despite the success of the economics of education as a field of inquiry, we argue that some of the contributions made by economists could be limited if the economics of education is seen as quite distinct from the other disciplines working in the field of education. In these areas of common interest, economists need to work side by side with the other major disciplines in the field of education if their contribution to the field is to be maximised, particularly in terms of applying improved methodology. We conclude that the study of education acquisition and its economic and social impact in the economics of education research area is very likely to remain a fertile research ground.

Changes in first entry to out-of-home care from 1992 to 2012 among children in England

Placement in out-of-home care (OHC) indicates serious childhood adversity and is associated with multiple adverse outcomes. Each year 0.5% of children in England live in OHC but evidence is lacking on the cumulative proportion who enter during childhood and how this varies over time. We measured the proportion of children born between 1992 and 2011 who entered OHC, including variation in rates of entry over time, and explored the determinants of these changes using decomposition methods. We also described changes in placement type, duration and stability. By age 18, 3.3% of children born 1992–94 entered OHC. This proportion varied by ethnicity (1.6% of White vs. 4.5% of Black children born 2001–03 entered OHC by age 9, 95% CI [1.5–1.7] and [4.4–4.6], p < 0.001) and increased over time (0.8% of children born 2009–11 entered OHC by age 1 vs. 0.5% born 1992–94, 95% CI [0.7–0.9] and [0.4–0.6], p < 0.001). This overall increase was driven primarily by the increased rate of entry among White children and not by concurrent changes in the population’s ethnic composition. The proportion of children entering OHC in England is increasing and characteristics of the care they receive are changing with earlier intervention and longer, more stable placements. Further research is required to understand the reasons for these changes in practice and whether they are cost-effective, sustainable, and improve outcomes for children and society.

The Economics of Vocational Education and Training

The recent financial crisis has been triggering high levels of youth unemployment in several countries within the European Union. As a reaction to the crisis, many policy makers and researchers have proposed a (re)enforcement of vocational training structures as a measure to facilitate the integration of young workers into the labour market. The main argument is that VET, and especially programmes involving a strong work-based component, increase the labour market attachment of young people and thereby enhance employment and wage prospects compared to more general schooling.

Data Resource Profile: Children Looked After Return (CLA)

Early exposure to adversity, such as abuse or neglect, is associated with poorer outcomes across social, education and health domains. Children in care (referred to as looked-after children in the UK) are a vulnerable group who experience adversity serious enough for the state to intervene in family life and place them under the supervision of child protection services within the home or, more frequently, to remove the child and place them in out-ofhome care (OHC). In England, placement in OHC can be voluntary (i.e. with parental consent) or mandated by a court. Some looked-after children have complex health needs and are voluntarily placed in temporary care in order to provide respite to their parents, but the majority of children in OHC are removed from their parents for reasons related to abuse or neglect. Being in OHC is an indicator of serious childhood adversity and a predictor of future adverse health, education and social outcomes. For example, children in OHC have poorer mental and physical health than their peers, are more likely to engage in risky behaviours such as smoking, drinking and drug-taking and have higher rates of teenage pregnancy and premature death. The causes of these adverse outcomes are complex and there is considerable heterogeneity among looked-after children. Some variation in outcomes has been associated with key characteristics of the care children receive while being looked after (e.g. age at first entry, setting, duration, stability) or with their exit from the social care system (e.g. destination, re-entry). For example, children in foster care have better mental health outcomes than those in residential group care, and psychiatric disorders are more common among children who experience multiple placement moves. It is therefore important to determine the prevalence among the child population of being placed in OHC and to explore how different types or patterns of care are associated with outcomes, both in childhood and in later life. Many studies of looked-after children in the UK are based on surveys; however, these may have selection and/or recall biases, and an alternative administrative data source that can be used is the Children Looked After Return (CLA). The CLA offers an important resource to improve understanding about the characteristics of children placed in OHC, how patterns of care vary across the country and are changing over time, and the relationships between the type or pattern of care and subsequent outcomes.

Factors associated with re-entry to out-of-home care among children in England.

Exiting and re-entering out-of-home care (OHC) is considered a disruption to permanence which may have long-lasting, negative consequences for children due to a lack of stability and continuity. Each year approximately one-third of children in OHC in England exit, but information is lacking on rates of re-entries and associated factors. Using national administrative data, we calculated rates of re-entry among children exiting OHC from 2007 to 2012, identified key child and care factors associated with re-entry using Cox proportional hazards modelling, and developed a simple probability calculator to estimate which groups of children are most likely to re-enter OHC within three months. Between 2007 and 2012 reentries to OHC in England decreased (from 23.3% to 14.4% within one year of exit, p < 0.001), possibly due to concurrent changes in the way children exited OHC. Overall, more than one-third of children exiting OHC in 2008 re-entered within five years (35.3%, N = 4076), but rates of re-entry varied by child and care characteristics including age, ethnicity, mode of exit, and placement stability. Based on these associated factors, we developed a calculator that can estimate the likelihood of rapid re-entry to OHC for a group of children and could be used by social care practitioners or service planners. Our findings provide insight into which groups of children are most likely to re-enter OHC, who may benefit from additional support or ongoing monitoring.