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Graduates boost productivity of labour force

Graduates boost productivity of labour force

New research conducted by the National Institute of Economic and Social Research, and published by the Department for Business Innovation and Skills, shows the long-run economic benefits of increasing participation in higher education.

It highlights that the accumulation of graduate skills in the labour force contributed substantially to the increase in labour productivity prior to the recent economic downturn.

The report shows that between 1982 and 2005 relatively strong productivity growth was associated with above average growth in the share of employment holding a degree.

Hourly labour productivity grew by 2.4% per annum ranking the UK third out of the 15 countries considered, behind only Finland and Japan. This relatively strong productivity growth meant that the UK closed the productivity gap with the US by ten percentage points.

Over the same period the share of the UK workforce with tertiary education also increased considerably; by 4.9% per annum (the second highest growth rate of the countries considered).

Focusing on a more recent period, 1994 to 2005, the share of the UK workforce with a university education increased by 57%. Over this period, average labour productivity increased by 34%.

The NIESR said its best estimate was that a 1% increase in the share of the workforce with a university degree raised the level of long run productivity by around 0.2%. This means that roughly one-third of the increase in labour productivity between 1994 and 2005 can be attributed to the accumulation of graduate skills in the labour force.

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George Bailey