ECONOMICS OF EDUCATIONAL ADAPTABILITY Henry M. Levin Columbia University Fundación Ramón Areces Fundación Europea Sociedad y Educación Madrid 25 March 2014

Educational Preparation of Workforce  Workplace and Employment are Changing.  New Educational Needs.  How Should We Prepare Educationally to Meet Economic Changes in Workplace?  Alternative Strategies.

Traditional Strategy of Preparation  Project changes in output  Project changes in work organization.  Project occupational needs.  Establish educational levels and requirements.  Transform educational capacity and content to accommodate new requirements.

Failure of Educational Planning  Even forecasts for a decade of occupational employment are poor.  Predicting changes in work requirements based upon changing technology and organization over 50 year period requires knowledge of a future that is entirely unknown.  Mediterranean project of manpower planning of OECD in sixties led to massive forecasting errors in a much more stable period than we are presently facing.

Education and Labor Productivity  Educated workers can make better resource allocation decisions.  Better understanding of work process.  Better allocation of own time.  Allocation of other resources of the firm such as avoiding bottlenecks by using skills developed in cross-training.  Better allocation of scarce inputs.

Achievement Scores and Educational Attainment  Test scores are one measure of skill.  Research shows test scores are related to worker productivity and earnings.  But relationship is surprisingly modest. About 10 percent of variance in earnings is explained by test scores.  Number of years of educational attainment explains about four times as much of the variance in earnings as do test scores.

Why is educational attainment so powerful in explaining productivity?  Students learn many cognitive skills not covered by the limited way in which we measure student achievement. Limited test domains. Limited test domains. Limited methods of measurement. Limited methods of measurement.  Educational attainment imparts non- cognitive skills important for worker productivity such as conscientiousness, effort, and interpersonal relations.

21 st Century Skills and Workplace  Phelps and Nelson (1966) “Education is especially important to those functions requiring adaptation to change.”  Change is what we will face continually in 21 st Century.  Rather than educating for narrow occupations and roles, educating for adaptability.

Adaptability at Present  Considerable substitution in occupational placement among educational levels as relative costs of educational labor and job requirements change.  For example, in U.S.with a 1 % increase in the relative cost of workers at one level of education there is a 1.5 % increase in employment of those with next lower level of education (elasticity of substitution).

Traditional Qualifications  Assumes each job has specific and narrowly defined qualifications that are reasonably stable.  Education laws require that training embody these qualifications for official recognition of title.  By law public employment is based upon official titles more than actual capabilities of different workers.  Private employers also use this system.

Transition  Focus on a more balanced system in which education for qualification is balanced by education for adaptability.  Adaptability becomes a key part of qualifications system for all workers.  What are requirements for adaptability?

Education Goals for Adaptability  Initiative.  Cooperation.  Group work.  Peer training.  Evaluation.  Reasoning.  Problem solving.

Worker Goals (cont.)  Decision making.  Information retrieval and use.  Planning.  Learning skills.  Multicultural skills.

Infusion of Adaptability   All educational levels.   Emphasis on practical applications in conjunction with subject focus.   Focus on innovation and knowledge production.   Leadership and peer skills in studies.

Conclusion  Promote continued expansion of education, but focus on quality too.  Movement towards worker adaptability.  Concern with education of immigrants and those from low-income backgrounds. Faster growth of these populations. Faster growth of these populations. Need to raise their productive participation. Need to raise their productive participation. Serious challenge foreseeable future. Serious challenge foreseeable future.

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