The Changing Economic Advantage from Private School. CEE DP 115
Author: Green, Francis
Date: 2010-04-00
Type: Reports - Research
Subjects: Foreign Countries,Private Education,Public Education,Education Work Relationship,Trend Analysis,Salary Wage Differentials,Social Mobility,Outcomes of Education,Educational Attainment

Private schooling, in its various guises, is an important feature of education systems across the world. The existence of a private education sector generates the possibility for parents to opt their children out of state provided education. In the case of the UK, private schools, though far less numerous than state schools, have for a long time played a very prominent role in the UK's economy and society. There is ample evidence that private school attendance generates significant economic advantages later on in life as individuals earn more in the labour market and are more likely to get top jobs. Indeed, the notion that privilege and later success are conferred on those attending private school remains a politically charged issue of debate. Given this, it is surprising that individuals currently know very little about how the economic and social impact of private education has evolved over time. They know next to nothing about how the higher earnings of the privately educated and their ability to successfully access jobs higher up the occupational ladder have shifted through time, nor what the drivers of any observed shifts might be. This therefore forms the subject matter of this paper. The authors provide a range of empirical evidence on the extent to which private/state school wage and education differentials have changed over time, and discuss possible transmission mechanisms that could underpin the observed trends. In this paper the authors therefore investigate the changing association between attendance at a private school and subsequent economic success in the labour market. They connect their findings to the discussions of changing wage inequality and social mobility, and also to the changing nature of the market for private schools. This is important as private school fees have risen very sharply over time and, as school fees ration access according to family wealth, the larger the economic advantage of private education needs to be to generate a &quot;payoff&quot; for parents investing in such education for their children. The authors document evidence that the private/state school wage differential has risen significantly over time, alongside rising costs of sending children to private school. A significant factor underpinning this has been faster rising educational attainment for privately educated individuals. Despite these patterns of change, the proportion attending private school has not altered much, nor have the characteristics of those children (and their parents) attending private school. This is suggestive that the pattern of sorting into private schools may not matter much in accounting for changes in wage and education differentials through time. Taken together, the authors' findings are consistent with the idea that the private school sector has successfully used its increased resources to generate the academic outputs that are most in demand in the modern economy. Moreover, because of the increased earnings advantage private school remains a good investment for parents who want to opt out, but this increase has also contributed to rising wage inequality and falling social mobility. Appended are: (1) Descriptive Statistics BHPS; (2) Earnings Differentials (Private Versus State School) BHPS; and (3) Degree Acquisition (Private Versus State School) BHPS. (Contains 4 figures, 9 tables and 16 footnotes.)