Skip to main content
McMaster University Menu Search
News
Protesters are unhappy about the cuts made to public education

Public education has economic payoff, says report

Jim Stanford, Professor of Economics at McMaster University, offers a review on "The Economics Case for Investing in Education"

Jul 05, 2019

From the article:

On a trip back to Toronto this week I attended the launch of a new report commissioned by the Ontario Secondary School Teachers’ Federation (OSSTF), and written by Aimee McArthur-Gupta from the Conference Board of Canada. The report presents some estimates of the economic, fiscal and social benefits of public education programs.

The report has two major analytical sections. The first uses the Conference Board’s input-output model to simulate the immediate spin-off economic effects of public education spending. Education is a major driver of economic growth and job creation -- yet conservatives insist on treating it solely as a "cost" or "drain," something to be minimized rather than optimized. The Conference Board suggests public education (K-12) accounts for 3.2 per cent of provincial GDP, and 290,000 direct and indirect jobs.

The report then simulated the effects of a 1 per cent increase in provincial spending on education (worth $291 million). It produces a multiplied impact on final GDP (with a final multiplier effect of 1.3). Almost one-third of the incremental expense is returned to government in tax revenues (about 40 per cent of that flowing direct to the provincial level). Wages and salaries (direct and indirect) grow by $275 million, and a total of 4234 additional jobs are created (in schools and administration, in the supply chain, and in downstream consumer goods and services provision).

If anything, I would suggest these estimates of immediate spillover impacts are conservative. Other macroeconomic models have identified even stronger multiplier effects from spending on relatively labour-intensive public services like education.

 

To read the full article, please visit rabble.ca