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Symposium 2009

Proposal - Overcoming Inequality through Education

The Challenge

According to the International Labor Organization, income inequality has increased in about two thirds of countries world since the 1990s. The financial crisis and the accompanying global recession ...

According to the International Labor Organization, income inequality has increased in about two thirds of countries world since the 1990s. The financial crisis and the accompanying global recession are expected to widen the gap further between the rich and the poor.

1. Dismiss the belief in the one-to-one relationship between equal education resources and equal education outcomes

Before designing an effective policy package, it is important to recognise that equal education resources such as equal expenditure on students and equal facilities are empirically found not to result in equal outcomes. Empirical evidence suggests that extra resources are required for supporting disadvantaged students to realise more equal employability opportunity of these students in the future.

2. Centralise performance standard determination, provide external performance tests for students but delegate autonomy to local governments and schools to make more appropriate educational decisions

Because of the multidimensionality and the extremely high relevance of education for the sustainable development of every country, it is expected to be efficient, if the central government can determine education goals in terms of clearly defined performance standards. Based on these standards, external controls such as external performance tests for students can be implemented. Moreover, sufficient autonomy should be delegated to the local players such as local governments and schools who know the local-specific needs and resources much better than the central government.

External controls, accompanied with appropricate reward and sanction mechanisms, are expected to excert additional but healthy pressure on the local players to optimise the allocation of scarce resources. Such controls are also expected to promote a healthy competition between schools, between teachers as well as between students.

3. Enhance the incentives of teachers

In addition to external controls and the accompanying reward and sanction mechanisms, some more policy measures aiming at enhancing teachers’ incentives are required to promote effective teaching and efficient learning. This does not mean that teachers should generally be better paid than now. What seems more appropriate though, is to introduce, at least partly, a performance related payment system: only teachers who, for example, voluntarily undertake additional assignments and carry them out excellently should be better rewarded. Additionally, teachers may be granted more autonomy to discuss with their students to arrange the most appropriate learning plans on their own, taking the relative strength among different students into account.

4. Keep a long breath

Studies show that it takes quite a long time to effectively improve the education quality and students’ skills and performance. In other words, success won’t be easy and swift even after determining clear education goals and applying appropriate education policies. Hence, long-term and stable education policies, continuous education investments and above all a long breath of all agents involved are required.

Background

Pertinent differences in the amount and the quality of human capital, related to inequality in educational attainment and education quality are often considered to be at the roots of interpersonal and international income inequality. Empirical studies find that education inequality measured in Education GINI coefficients has been mitigated and education attainment in years has been extended in many countries in the world (Thomas, Wang and Fan, 2002)– from this one would expect a decrease in income inequality in the long run. However, many countries suffer from even higher income inequality over the last decades. This seeming contradiction may be an indication that there is no easy road from mainly extending education attainment towards altering the opportunity structure and, moreover, that it may not be appropriate to define equal opportunity in terms of equality of outcome.

There is increasing empirical evidence that only education policies which indeed improve education quality and help enhance students’ cognitive skills and learning performance are likely to make substantial and positive contributions to mitigating interpersonal and international unequal income distribution and on economic growth (Hanushek and Woessmann, 2008). The positive effects of improved education quality and cognitive skills of students on income equality are harnessed in a more productive institutional environment for markets and legal systems (e.g. protection of property rights, openness to international trade). Both, the level of cognitive skills and the quality of the institutional environment are important for and reinforce each other in fostering economic development.

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