This Commission paper analyses the demographic and institutional influences underlying public spending on education, as well as the consequences for average educational attainment and economic growth.

The rise in average attainment in the 25-64

constant rate of return). This does not take into account the

The prospective contribution of education to

growth varies widely among countries (by a factor of more than 1:8

over the next decade and almost 1:6 over the next 50 years). This

is mainly because current average attainment varies widely, and

countries at the lower end of the distribution have greater scope

for increasing average attainment in future. In many cases

The pure demographic effect – a reduction in

the number of young people aged 3-24 – leads to savings in the

order of 1.0% of GDP. However, there are two offsetting effects.

First, labour force projections imply (barring an increase in youth

inactivity) that enrolment in upper-secondary and tertiary

Direct projections of increased enrolment at

upper-secondary and tertiary levels, based on the continuation of

recent trends, suggest that educational expenditure in the EU may

continue to grow (by 0.7% of GDP on average between now and 2050,

and by as much as 2.4% if the trend increase in expenditure per

student continues). This of course marks a clear departure from a

‘no policy change’ scenario. Nevertheless, targets have been set at

It is interesting to compare the decrease in

costs due to the demographic fall in the number of students (on

average -0.9% of GDP) with the extra costs of ‘institutional

inertia’ (on average

0.7%

of GDP) – whereby expenditure per student does not, partly for

quite understandable reasons, decline in line with student numbers.

This paper does not offer conclusions about

the case for more or less public investment in education. This

depends on the private benefits to individuals as well as the

social benefits. In countries where the projected increase in

attainment is relatively small, some observers might see the need

for investments in education to stimulate growth, but it is

impossible from the results presented to draw any conclusions about

the efficiency of such investments compared to other uses of public

funds. However, two points are worth noting. First, even in