Schools aren’t to blame for the NEET crisis

When learning more doesn’t help you earn more

One of the biggest debates in education economics is whether there is a causal link between education and income. If you learn more, will you earn more? I’ve written about the challenges of trying to answer this question at the individual level before, here.

But it is just as difficult to answer the question at the national level. If a nation invests more in high quality education for all of its children and young people, can it expect to get richer as a result?

Eric Hanushek’s cognitive skills research

For a long time, education economists measured the effectiveness of education by input measures, like years spent at school. But input measures are not a great way of assessing any system, because they only tell you what resources have gone into a system, not what it has actually achieved.

Starting from the mid-1990s, the economist Eric Hanushek attempted to measure one important output of different education systems: the cognitive skills of school students. Then, he would see if cognitive skills had an impact on economic growth. He combined the results of various international student assessments, and found that countries with higher test scores had faster economic growth.

How skills imcrease productivity

This obviously makes a lot of intuitive sense. Clearly it is very hard to manage in the modern workplace if you can’t read and write well. If you have ever struggled for 40 minutes to set up a spreadsheet with the right formula, and then had a colleague come along and solve it in 30 seconds, then you can see how improving your knowledge & skills makes you more productive at work.

Likewise, if you’ve ever set up a spreadsheet that you are really proud of and then had a colleague come along and say “this would be more efficient as a database”, you can see how increasing your knowledge & skills allows you not just to work faster, but to find completely different ways of doing the work in the first place.

However, it is also clearly not the whole story

One historical counter-example of the “education causes economic growth” theory is the former Soviet Union. We don’t have great data on its levels of educational attainment, but by all accounts its education system was pretty good, both at the mass and the elite level. However, that was not enough to generate the same levels of economic growth seen in free-market economies that probably had less good education systems.

There are a lot of anecdotal stories of Westerners being blown away by the impressive technical skills of Soviet-educated migrants - and of Soviet-educated migrants being blown away by the salaries on offer in the west.

So skills matter, but other things matter too. An economy has to be set up such that it can take advantage of the skills of its population.

Just this week in the Financial Times, the data journalist John Burn-Murdoch produced a fascinating analysis that shows that a lot of countries with weaker education systems than the UK nevertheless have higher wages and stronger economic growth. This leads to some quite startling conclusions: functionally illiterate workers in the US earn about as much per hour as the average British worker.

Now of course, better earnings are not the sole purpose of education. But they certainly are one purpose, and as such these findings are enormously sobering. For all of the work and effort teachers in the UK put into educating children, in purely economic terms a lot of those children would be better off if we had just bought them a one-way plane ticket to America and found a way to get them a green card.

What is causing the NEET spike?

This is all very relevant to current debates in the UK. The new government is concerned about the rising levels of young people who are not in education, employment or training (NEET). Across the UK, the proportion of NEET 16-24 year olds has increased from 11% to 13% in the past seven years. Clearly, education has a role to play here, and we know that one of the strongest predictors of being NEET is failing to get five good GCSEs.

However, if we see a sudden spike in NEETs, can we then automatically assume that this is the result of something going wrong in schools? No, of course not. Suppose there is a big economic downturn caused by a stock market crash or a war or a pandemic or a spike in energy prices, or any kind of external shock. Unemployment could rise, and we would see a spike in NEETs. This would obviously not be because students suddenly stopped learning, or schools suddenly got worse!

So what is going on in the UK at the moment? Is the NEET increase due to something that has gone wrong in schools? Or is it due to wider economic factors?

The UK’s new education secretary, Lucy Powell, believes very firmly that it is the consequence of schools policy changing. In a recent article in The Times, she said “One million. That’s how many young people from the education system Michael Gove presided over who are now left outside education, not in employment and not in training. That’s not a coincidence — it’s a consequence. It’s his legacy.”

Is she right?

Fortunately, we have a natural experiment that can help us tease out this question. The Gove reforms that Lucy Powell refers to started in about 2010. At approximately the same time, Scotland and Wales embarked on education reforms that were essentially the complete opposite of what Gove was doing in England.

If England’s education reforms had caused NEETs to spike, we should see that the spike would occur in England, but not in Scotland and Wales. If, on the other hand, the problem was due to something non-educational, we should see a spike across all of them.

Unfortunately, Scotland no longer publishes comparable NEET statistics. But England and Wales do, and when we look at that data we can see that NEETs have risen by about the same proportion in each country. Since 2019, the UK NEET rate has gone up from 11 to 13%. The England rate is basically the same (unsurprising, as England makes up 85% of the UK). The Wales rate has gone up from 14% to 17% over the same time. It is therefore very hard to sustain the argument that the UK-wide increase in NEETs is caused by changes in English education policy.

What are the other factors that might have caused it? And more broadly, what are all the other factors that lead to functionally illiterate Americans being able to earn as much as the average Brit? Obviously people will have their preferred candidates, but some suggestions are housing, transport, energy, taxation, regulation, health. On youth unemployment specifically, a number of think tanks and government reports have pointed out that over the last few years, it has become much more expensive to employ a young person. This may well be a factor in the increasing NEET rate.

Do primary schools need a NEET strategy, or does the government need a growth strategy?

Over the last couple of decades, successive UK governments have introduced reforms of how primaries in England teach and assess reading. These reforms have proven remarkably successful – a rare example of a recent public policy success. On PIRLS, an international test of primary reading, England are now fourth out of 43 countries and the highest-performing country in the west. International delegations frequently visit primary schools in England to find out what they are doing right. Other jurisdictions have copied England’s Year 1 phonics assessment.

Over a similar time frame, the UK has barely seen any per capita economic growth or increase in real median wages. I can’t be certain, but I doubt that international delegations are knocking down the door of the UK civil service to find out how to copy their economic growth strategy.

However, the Guardian reported yesterday that a senior government adviser wants primary schools to develop a NEET strategy. According to this article, primaries will need to start using RONI (risk of NEET indicator) tools to flag a child’s risk of becoming NEET, and develop tutoring and mentoring schemes to prevent it.

I would politely suggest that rather than getting primary schools to develop NEET strategies, the better public policy option is for the government to develop a growth strategy.

Primary schools are succeeding at one of the most important tasks we ask of them. Rather than ask more of them, we need the other parts of the British state to get better at fulfilling their main responsibilities.