Education

An extra $437 spent on every child boosts high school graduation rates, finds a new study. Here’s how

Higher public spending on education and support for vulnerable households boosts graduation rates, a study by Michigan State University has found.

Higher public spending on education and support for vulnerable households boosts graduation rates, a study by Michigan State University has found. Image: Unsplash/Aaron Burden

Victoria Masterson
Senior Writer, Forum Agenda
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Education

  • Higher public spending on education and support for vulnerable households boosts graduation rates, a study by Michigan State University has found.
  • Education also increases wages, reduces poverty, cuts crime and improves health.
  • The education system must be reimagined to meet skills needs of the future, the World Economic Forum says.

If governments spent more money on education and support for vulnerable households, graduation rates would rise, a new study suggests.

Researchers at Michigan State University in the United States analyzed high school graduation rates over a seven-year period to see how public spending affected them.

They found that extra spending of $437 per child on social programmes for low-income families, or $720 in educational spending, boosted high school graduation rates by one percentage point over the seven years.

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Education and social funding is vital

The findings, which are published in the Journal of Adolescent Health, highlight the importance of adequately funding both education systems and social safety net programmes, the researchers say.

Social safety net programmes play an important role in the fight against poverty and can include cash, school meal programmes and pensions, the World Bank explains.

Other research supports the link between education spending and graduation rates.

A paper from the Institute for Policy Research, a public policy research centre at Northwestern University in Illinois, US, found that a 10% increase in spending across all 12 years of public school led to a 7% increase in graduation rates.

Further benefits from this rise in education spending included graduates earning 13% more in wages by the age of 40 and being 6 percentage points less likely to live in poverty.

Higher education spending improves graduation rates and wages for students.
Higher education spending improves graduation rates and wages for students. Image: Institute for Policy Research

Investing in education has other benefits

Investing in education delivers economic growth and other benefits, says the World Bank, which helps developing countries achieve sustainable growth.

It adds that keeping children in school longer in lower-income countries is “one of the best global investments that can be made”.

Every year a person is in education translates into a 10% rise in annual earnings, the World Bank notes.

It says the broader social benefits of education include lower crime rates, less poverty and better health.

Higher levels of employment, more innovation and higher earners paying more taxes are some of the other economic and social benefits of education listed by the Organisation for Economic Co-operation and Development (OECD), a 38-country grouping that advises policymakers.

Reimagining the education system

In its Catalysing Education 4.0 report, the World Economic Forum warns that millions of children globally are out of school, and even those in school aren’t learning the skills they need to succeed in the rapidly accelerating age of technology advances known as the Fourth Industrial Revolution.

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What is the World Economic Forum doing to improve digital intelligence in children?

Figure showcasing the projected returns from raising the investment in collaborative problem solving skills.
Developing skills needed in future workplaces, like problem-solving, could add $2.54 trillion in higher productivity to the global economy. Image: World Economic Forum

The Forum calls for global investment in reimagined “high quality, innovative, future-proof education systems”. These should focus on developing skills for future workplaces, such as collaborative problem-solving – working together as a team to solve problems.

Improving these skills in students could add an extra $2.54 trillion in increased productivity to the global economy, the Forum estimates.

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