Education Needed to Raise Jobs and Revenues

September 8, 2010 International Tax Cooperation

Fake diplomaIn order to boost employment levels and increase national tax revenues, governments need to strive to provide top-quality tertiary education within their country.

According to the latest edition of Education at a Glance, an annual report by the Organization of Economic Cooperation and Development (OECD) released on September 7th, in today’s economic climate of continually burdensome unemployment levels it is essential for governments to make significant investments into the national tertiary education sectors to better cope with future economic downturns,

Increased funding of the tertiary sector can lead to raised tax collections over the working lifetime of an educated individual. According to the report, an average tertiary educated male taxpayer in an OECD nation will generate approximately USD 119 000 more in income taxes than an worker with only a high-school education, over their respective working careers. Even when taking into account the cost of financing tertiary studies, the extra tax revenues will reach approximately USD 86 000, with immeasurable further benefits to the economy, like business creation, along with corporate income and consumption taxes.

In addition to increased tax revenues, investment into tertiary education can lead to significantly lowered levels of unemployment. According to the report, throughout the global economic downturn in 2008 and 2009, unemployment levels for young people without a secondary school education rose by approximately 5 percent, to an average of 9 percent across all OECD-member nations. Comparatively, individuals with tertiary educations experienced average unemployment rate increases of only 2 percent, reaching an estimated 4 percent.

The report also noted the growing levels of student exchanges between OECD tertiary providers, with nearly 3.3 million students enrolled in higher-level educational institutions outside of their country of citizenship in 2008, a 10.7 percent increase over 2007. Angel Gurría, OECD Secretary-General, commented on the importance of tertiary education and the trend of international studies, saying: “In a global economy, it is no longer improvement by national standards alone. The best performing education systems internationally provide the benchmark for success.”

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