OECD report: education the answer to boosting economic growth
The statistics don’t lie in the OECD’s latest research, which points to a lacking investment in education as the major culprit behind rising inequality that is costing economies and slowing growth around the world.
According to the Organisation for Economic Cooperation and Development (OECD), a growing social economic divide is having a “statistically significant impact” on economic growth. The OECD is urging governments to increase investments in education for low income groups to curb the problem.
“This compelling evidence proves that addressing high and growing inequality is critical to promote strong and sustained growth and needs to be at the centre of the policy debate,” said OECD Secretary-General Angel Gurría. “Countries that promote equal opportunity for all from an early age are those that will grow and prosper.”
Between 1990 and 2010, the report shows that rising inequality has cost New Zealand and Mexico 10 percentage points of GDP, the UK nine points, and has robbed the US of nearly seven points over the same period.
Education is the answer
The report makes it clear that education is the key to turning the inequality table.
The OECD cites lagging investments in education as a major cause behind the rise of inequality. The report says that those coming from a lower-income background suffer from “average education” and fewer educational opportunities, which helps drive increased inequality.
The research also reveals that children of parents with low levels of education “see their educational outcomes deteriorate as income inequality rises,” which in turn leads to lower social mobility and reduced skill development. However, the same does not apply to those whose parents achieved higher levels of education.
The hard stats
- The gap between rich and poor OECD countries is at its highest in 30 years
- The top 10 percent of individual earners make an average of 9.5 times more than the poorest. Thirty years ago it was only seven times as much.
- The OECD found that Inequality only fell in Greece and Turkey.