II Participation & Preferences

The Economics of Higher Education Participation

Kevin Denny and Darragh Flannery

Introduction

The recognition of education having a positive role in economic development is established through the macroeconomic growth models of Solow (1956), Lucas (1988) and Romer (1990), and in a microeconomic framework with the human capital models of Mincer (1958), Schultz (1961) and Becker (1964). The basic tenet of both fields is that increased education leads to higher productivity, which in turn leads to higher outputs and incomes. Economic studies in relation to education have mainly focused upon estimating this relationship, both at a macro and micro level (Stevens and Weale 2004).

K. Denny (*)

School of Economics, University College Dublin, Dublin, Ireland D. Flannery

Department of Economics, University of Limerick, Limerick, Ireland © The Author(s) 2017

J. Cullinan, D. Flannery (eds.), Economic Insights on Higher Education Policy in Ireland, DOI 10.1007/978-3-319-48553-9_2

There are two main channels through which this association is seen to manifest itself: in a direct manner at the individual level and in an indirect way at the level of society. At the individual level, education and economic growth are linked positively through education’s ability to improve an individual’s productive capacity by increasing their human capital. The latter term refers to the stock of competences and knowledge an individual possesses that enables him/her to produce some economic value, with higher levels of education generally associated with having a higher amount of human capital. Improvements in an individual’s productive capacity feed into output growth, which then leads to economic growth. Individuals may also derive many non-pecuniary benefits to extra education. Those with higher levels of education have been shown to have higher levels of self-reported health measures, job satisfaction and general happiness (Hartog and Oosterbeek 1998; Oreopoulos and Salvanes 2011).

There are also social returns to education from both a monetary and non-monetary perspective. The former relate to the indirect contribution of education to increased economic growth. These may stem specifically from externalities such as increased political and social stability that results from a population with higher educational levels and/or spillover effects leading to increased co-worker productivity (McMahon 2004). The non-monetary societal benefits to higher levels of education include reduced income inequality and lower crime rates (McMahon 2009). Therefore, given its significance at an economic, individual and social level, the encouragement of participation in higher education is a key policy objective for most governments of developed economies around the world.

In this context, participation in third-level education has grown significantly over the past 20 years in the majority of developed economies (OECD 2015). As outlined in Chap. 1, Ireland is no exception to this trend with the number of full-time new entrants to undergraduate higher education now exceeding 41,400, a figure that is 7% higher compared to 2011 (Higher Education Authority [HEA] 2016). The expansion of opportunities for higher education in Ireland is further manifested in the attainment levels of young adults (aged 25-34 years), 49% of whom now have a higher education qualification, well above the OECD aver?age of 39% (HEA 2016). This expansion has been further encouraged by the recent National Strategy for Higher Education to 2030 to enable Ireland “to achieve its ambitions for recovery and development within an innovation-driven economy” (Department of Education and Skills 2011,

p. 10).

Given the rapid growth already seen and the continued objective of expansion within the sector, it is important to gain an understanding of the factors that may influence individuals to participate in higher education. It is also useful to investigate participation in higher education from an equity viewpoint. This may help evaluate current and inform future higher education policy. This chapter aims to provide this examination in the Irish context. The next section will provide an overview of participation in higher education. We then explore the most prominent theoretical aspects of how the decision to participate in higher education may be formed. We also outline the relevant international literature to have empirically examined these decisions within this section. We next present the results from empirical models of participation using Irish data. These specifically highlight the influence of factors such as social class, gender and policy tools on both the decision to attend higher education and also the type of higher education institution (HEI) an individual may attend. This section also presents estimates of the main determinants of upper secondary exam performance in Ireland. The final section of the chapter presents a summary of our findings and a discussion of their implications.

 
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