Irish Debate Sessions

A few months ago, I did a session on IrishDebate.com on the implications of behavioural economics for Irish public policy. This is reproduced below. The format allows for multiple contributors etc., I am currently putting together notes for two other sessions, one on unemployment and another on the theme of "irish abroad". It is a format worth thinking about for issues at the interface of academic and policy issues.

Graduate Unemployment

I can't find the release on the HEA website, but a story in the Irish Times from Saturday states that "fewer than half of undergraduates who completed degrees in 2009 are employed, according to provisional figures from the Higher Education Authority. The initial findings of a HEA survey indicate that 45 per cent of those who graduated last year are in employment, while 43 per cent have gone on to further education." The Irish Times article also says: "According to CSO figures, in March 2010 there were just over 59,000 unemployed graduates in Ireland." On Saturday's Mariane Finucane show on RTE Radio 1, Charlie Bird stepped into the presenter's seat and spoke to a number of recent college graduates about their plans for the future.

Links: 23rd July. Special Focus: Emigration.

1. Adam Jaffe: Building Program Evaluation Into The Design Of Public Research Support Programs

2. NSF Survey of Federal Funds for Research and Development

3. Greg Mankiw discusses the U.S. Council of Economic Advisers' "impossible job": measuring how many jobs were created by the American Recovery and Reinvestment Act of 2009. Here's a link to the CEA document.

4. Marginal Revolution flags a recent paper by Weber and Castillo from Yahoo! Research: The Demographics of Web Search. "How does the web search behavior of 'rich' and 'poor' people differ? Do men and women tend to click on different results for the same query?"

5. David McWilliams on emigration out of Ireland: "The ESRI predicts that 120,000 will leave the country in the next 18 months, on top of the 100,000 who have already gone in the past 18 months."

6. It was last year that the CSO reported that for the first time since 1995 more people left Ireland than moved here. That is, there was net outward migration.

7. Overall, the ESRI commentary warns that 200,000 people may be forced to emigrate between now and 2015 if unemployment does not abate.

8. In addition, a new Eurobarometer survey shows more than one fifth of Irish people are thinking of moving abroad for work. It also shows that 35% of Irish people feel employment prospects are better in other countries.

9. This Irish Times article states that current statistics show "Irish people are moving to both Canada and Australia in increasing numbers to escape the economic recession but are largely shunning traditional emigration routes to Britain and the US."

10. A companion article by the same journalist (Jamie Smyth) considers whether time abroad could end up as permanent emigration: "...if the Irish economy does not rebound in the next few years and create job opportunities for the next generation of graduates and school-leavers it seems very likely that a year spent working abroad will lead to longer term and more permanent emigration." To quote an old Pogues song, (hundreds of) thousands are "sailing".

Links: 19th July 2010

1. "Avoiding a Lost Generation: How to Minimize the Impact of the Great Recession on Young Workers": Testimony before Joint Economic Committee of the United States Congress on May 26th, 2010. By James Sherk: Senior Policy Analyst in Labor Economics at the The Heritage Foundation.

2. "The Kids Aren’t Alright — A Labor Market Analysis of Young Workers": Kathryn Anne Edwards and Alexander Hertel-Fernandez (Economic Policy Institute): EPI Briefing Paper #258, April 7, 2010.

3. The Browne Review (or the Independent Review of Higher Education Funding and Student Finance) is a panel which will consider the future direction of higher education funding in England. It was launched on the 9 November 2009 and is being chaired by Lord Browne of Madingley, the former chief executive of BP. Wikipedia provides additional information.

4. "Policy Watch: Income-Contingent College Loans": Alan B. Krueger and William G. Bowen, The Journal of Economic Perspectives, Vol. 7, No. 3 (Summer, 1993), pp. 193-201

5. ESRI Higher Education Policy Conference: "Higher Education Policy: Evidence from Ireland and Europe". Venue: The ESRI, Whitaker Square, Sir John Rogerson’s Quay, Dublin 2. Date: 16/11/2010.

6. David Willetts MP, the UK universities minister: "If You Can't Get a Job, Start a Business", Guardian: 16th July 2010.

7. On a lighter note, one for Dr. Kev: "Irishmen prefer to be single, survey shows". "Lee-Ann Burke, a lecturer in economics at University College Cork , said the study contradicts other surveys showing men happier being married."

8. Google Offers OCR: when you import files into Google Docs (JPEG, GIF, PNG, or PDF) you have the option of running optical character recognition on them.

9. The Turbulence Ahead blog got a makeover.

10. Finally, here's a video of Pete Lunn (ESRI) speaking at the Irish Economics and Psychology event last November, on "A Computational Theory of Exchange". Thanks to Karl Deeter for organising the video; if you follow this link, you will see other talks from the event by Marcel Das, Stephen Kinsella and Jonathan Murphy.

Fresh thinking on graduate unemployment

The high (& rising) rate of unemployment amongst new graduates is a matter for grave concern. Liam Delaney has posted eloquently here & elsewhere on the subject. Given the fiscal difficulties the government here faces there are not many easy policy options available. So innovation in policy making is more important than ever if a generation's human capital is to be prevented from obsolescence, going forward. So it is heartening to see innovative, practical, evidence-based ideas coming out of the US where similar problems prevail.

http://www.theonion.com/content/news/new_college_graduates_to_be

The Effects of Graduating During a Recession

The Columbia Economics website has an interesting research section on Employment, Health, Education and Welfare: "Columbia's applied microeconomists study within a variety of subfields, including labor economics, health economics, and the economics of education." There is a particular section devoted to Market Shocks and Their Short and Long-Term Effects on Career Profiles. Here's an excerpt about research conducted by Professor Till von Watcher; it will make interesting reading for current graduates. The message seems to be: get a job sooner rather than later; even if that means emigrating or working in a low-paid internship. Even then, there will still be a career disadvantage in many cases.

Using a comparative approach between the labor markets of the U.S. and Europe, Till von Wachter studies the short and long-term effects of market shocks on workers' careers. In his paper, "The Short and Long-Term Effects of Graduating in a Recession (with Philip Oreopoulos and Andrew Heisz)," he uses the example of Canadian students graduating during a recession to show how the setbacks experienced by students entering into a temporarily inhospitable job market can have relatively permanent consequences which slowly fade only after about eight to ten years. Students graduating in a healthy market can maintain a significant advantage over the ones initially affected by the recession.

1 in 3 Men Unemployed, Under the Age of 25

I mentioned some statistics about current conditions in the Irish labour market in a recent post. 1 out of 8 individuals in the Irish labour force are unemployed. Taking account of labour force withdrawal and reduced working time, it is estimated that approximately 1 out of 7 are in some form of labour market distress. Gender breakdowns indicate that 2 out of 3 of these individuals are male. The latest Live Register figures show that almost twice as many men are claiming unemployment benefit (or allowance), compared to women.

Despite many posts on this blog flagging youth and graduate unemployment (a recent one is here); I was still somewhat surprised to read in today's Irish Independent that 1 in 3 men under the age of 25 are now unemployed. I decided to take a look at the most recent QNHS publication; the figure of 1 in 3 is indeed correct. Table 14 from the QNHS publication (shown below) indicates that 36.9% of males ages 15-19 are unemployed; and that 31.7% of males aged 20-24 are unemployed. This approximates to one third of males under the age of 25 being currently unemployed. The number of persons under 25 years of age on the Live Register are available on Table 2b (page 3) of Friday's Live Register release: the figure is 84,400. (Click on the table below to see a larger picture of QNHS Table 14).


What else can we learn from the table above? Looking at both genders under the age of 25, approximately 27% are currently unemployed; this figure is over double the current national average of 12.5%. The gender difference in unemployment is most marked in the 20-24 age-group; twice as many males (compared to females) are unemployed in this category. There are also twice as many males unemployed in the 25-34 age-group. These ratios are in line with the national figures for unemployment (2 out of 3 unemployed individuals are male). Across both genders, the highest concentration of unemployment is in the 15-19 age-group, followed by the 20-24 age-group; and monotonically decreasing for higher age-groups.

Finally, what can we infer about graduate unemployment? If we consider the 20-24 age-group on its own, we see that one quarter of these individuals are unemployed; and that males account for two thirds of the unemployment figure. Only a subset of individuals in the 20-24 age-group hold graduate qualifications; what we know about this demographic comes from the QNHS Special Module on Educational Attainment that ran from 2003-2008 (see Table 2 on page 6 of the Pdf). In March-May of 2008 (the most recent data available), 25% of the 20-24 age-group holds a third-level qualification (non-degree, degree, or above). 45% of the 25-34 age-group holds a third-level qualification as at March-May 2008; the higher attainment level of the 25-34 age-group suggests that graduate unemployment is as much (if not more) of a problem for this age-group.

To re-cap, we know from the QNHS Special Module on Educational Attainment that 25% of the 20-24 age-group, and 45% of the 25-34 age-group, had third-level qualifications as at March-May 2008. From the most recent QNHS we know that 24.2% of 20-24 year-olds, and 14.1% of 25-34 year-olds, are unemployed. However, it is important to be careful at this juncture, because we cannot yet tell whether unemployed individuals (aged 20-24 or 25-34) are more or less likely to have third-level qualifications. Though it only refers to March-May 2008, the most indicative source of information about graduate unemployment appears to be the breakdown of ILO employment status by educational attainment and age-category in the QNHS Special Module on Educational Attainment. Table 5 in the QNHS Special Module shows the employment rates of persons aged 25 to 64 by highest level of education attained. Unfortunately, 25-64 is the only age-range used; and QNHS Database Direct does not include the educational attainment variable.

The Work Placement Programme (WPP)

The Tánaiste and Minister for Enterprise, Trade and Employment, Mary Coughlan, together with the Minister for Social and Family Affairs, Mary Hanafin, announced details of the Work Placement Programme (and a pilot Short Time Working Training Programme) on Wednesday 27 May 2009. A press release is available here, from the website of the Department of Social and Family Afafirs. The summary of the plans from the press release is below.

The Work Placement Programme is a six-month work experience programme for an initial 2,000 individuals who are currently unemployed. Under this programme there will be two streams each consisting of an initial 1,000 places. The first stream is for graduates who before this year have attained a full award at level 7 or above on the National Framework of Qualifications and who have been receiving Job Seeker’s Allowance for the last six months.

The second stream will be open to all other individuals who have been receiving Job Seeker’s Allowance for the last six months. Under this stream 250 places are being ring fenced for those under 25 years of age.

Participants on both streams of the Work Placement Programme will continue to receive their existing social welfare entitlements from the Department of Social and Family Affairs for their duration on the programme.

The pilot Short Time Working Training Programme will provide two days training a week for 277 workers over a 52-week period. Under this scheme, workers who are on systematic short time working for 3-days a week and receiving social welfare payments for the two days they are not working will receive training for these two days. Participants on this programme will continue to receive their existing social welfare entitlements from the Department of Social and Family Affairs.

Graduate Employment

Gerard O'Neill puts forward a proposal for a tax rebate on hiring graduates. The key features are below.

-Every business in the country that is up to date with their tax returns receives a graduate voucher, which they must start using between now and the end of 2009.
- If they choose to use the voucher, they have to employ a graduate (third level or plc) who is not already in employment or has graduated in the past year and been unemployed since.
the company can then use the voucher to offset, say, 50% of the graduate's salary, up to a limit of, say, €24,000.
-The offset would take the form of a straightforward tax rebate: in other words, the employer would submit their normal monthly PAYE tax return, deducting 50% of the graduate salary for that month (€1,000 at maximum level).
- The voucher is valid for one year from the date of employment of the graduate.
- It would be a policy decision whether to extent it for, say, another year - after that, recovery should have set in and thus the scheme is no longer required

http://www.turbulenceahead.com/2009/05/worthwhile-investment.html

(How) Does the Leaving Cert. Prepare You For The Labour Market?

At the ESRI Labour Market Conference last week, Philip O'Connell discussed how the educational profile of unemployed males has evolved such that the biggest increases (between 2006 and 2008) in unemployment for males occur for those with Leaving Certificate and PLC qualifications. In the recent New York Times interview with Obama (that Colm mentioned), the U.S. President states that "I think the big challenge that we’ve got on education is making sure that from kindergarten or prekindergarten through your 14th or 15th year of school, or 16th year of school, or 20th year of school, that you are actually learning the kinds of skills that make you competitive and productive in a modern, technological economy." So are graduates of Ireland's Leaving Cerificate (Leaving Cert.) and PLC programmes getting the skills they need for the modern economy? There is also the vocational Leaving Cert. and Applied Leaving Cert. to bear in mind - see link here.

As the majority of students take the conventional Leaving Cert., and what I have to suggest may benefit all students, I will orientate my comments on Leaving Cert. curriculum-reform to the conventional programme. It should be noted that Senior Cycle education (i.e. Transition Year and Leaving Cert. programmes) is currently the subject of a major review by the National Council for Curriculum and Assessment (NCCA), including curriculum re-structuring and re-balancing. One example is that the NCCA has developed a draft syllabus for a new subject in the area of social and political education, called Politics and Society. This could be an engaging optional subject for many Leaving Cert. students.

In the review of senior cycle education, there is a particular focus on the role of ICT in the review of subjects and the development of short courses. It is proposed that some of the short courses developed will have a significant ICT focus, for example: "Media Communications Technology". Curriculum, Assessment and ICT in the Irish Context: A Discussion Paper sets forth the NCCA vision for Information and Communication Technology (ICT) in curriculum and assessment in Irish primary and post-primary schools. "This document was developed to stimulate discussion and deliberation regarding the potential of ICT to support and extend the curriculum development and assessment work of the NCCA."

The comments I make below bear in mind exisiting developments in Senior Cycle curriculum strategy and are largely motivated to address the question - (how) does the Leaving Cert. prepare students for the labour market? This includes concerns about:
(i) those whose education stops at Leaving Cert.
(ii) those whose higher education options are restricted by Leaving Cert. subject choices
(iii) those who enter higher education but subsequently drop out and find they have to mostly use what they learned in their Leaving Cert.
(iv) those who might consider returning to higher education as a mature student

Some motivation for addressing these concerns is provided by Obama in the recent NYT interview: "My grandmother never got a college degree. She went to high school... She went to work as a secretary. But she was able to become a vice president at a bank partly because her high-school education was rigorous enough that she could communicate and analyze information in a way that, frankly, a bunch of college kids in many parts of the country can’t...we’ve got to — in our education-reform agenda — we’ve got to focus not just on increasing graduation rates, but we’ve also got to make what’s learned in the high-school and college experience more robust and more effective..."

The main suggestion that I want to propose is to re-orientate the Leaving Cert. curriculum to have four compulsory subjects: English, Maths, Applied Maths (geared towards information technology) and the “Chemistry and Biology of Everyday Life” (CBEL was discussed on the blog before - here). Having four compulsory subjects at Leaving Cert. (geared towards the needs of the economy) is suggested because (a) the economy is suffering a massive unemployment shock, and (b) there are many potential problems with subject choice at Leaving Cert., including the possibilities that:

- there is only partial information available until the student enters the college course of their choice (in other words, they may not know what they would really like to do)
- students may choose “high points” courses simply because they are “high points” courses (and not true preferences)
- another problem is exemplified by the applicant who decides to look only at courses within a certain points-band. For example, let us say that a student anticipates getting 340 points. He or she will scour the lists of last year's cut-off points, picking courses that "cost" 340 points or thereabouts, almost regardless of the content of the course

An article from Science describes the CBEL initiative as a potential solution to preference misalignmnet - at least in the specific subject domain of science. The article describes how some American universities have been trying to match science students to their interests. The course called “The Chemistry and Biology of Everyday Life” (CBEL) was developed using students’ interests in everyday life as the starting point for instruction. Of course, the American higher education system is largely non-specialised at entry to under-graduate level (see more on this here), which allows for initiatives such as CBEL post high-school. But why not have something similar for Leaving Cert. in Ireland, which builds on what students learned in the Junior Cert.? This would keep students exposed to science after the Junior Cert. (if they are not doing any science subjects as options).

One question arises which is obvious enough: "Where do we have time to fit in CBEL during 5th and 6th year?". This may be bring us onto some very difficult questions about the economic returns to certain courses of education at Leaving Cert. While Irish language is important for heritage (and knock-on effects on tourism), do we not get enough of that benefit by schooling students in the Irish language up until Junior Cert.? Why not have students take CBEL instead of Irish for Leaving Cert.? Those who want to study Irish at third-level (and I can see the need for this) could enter third-level courses that pick up where Junior Cert. Irish left off.

The fourth compulsory subject that I suggest is the Applied Mathematics course, geared strongly towards information technology. I suggest that this could be taken at Higher or Ordinary Level, but the hope would be that more students would take it at Higher Level compared to the existing (abstract) course on Maths. Take-up of the exisiting Maths course at Higher Level is extremely low, so it may be more realistic to accept that some students will continue to take the abstract Maths course at Ordinary Level (where they will still get a Maths work-out). But that they will persist with Higher Level in a new "applied" Maths course with real-world focus. This course could be useful for securing IT employment (especially for those whose education stops at Leaving Cert.) or for securing entry onto IT courses in higher education (and critically, performing well on those courses).

So the situation I suggest would be as follows - students have to take Maths, Applied Maths, CBEL and English. And then they would choose three additional courses. Looking at Leaving Cert. subject choice between 1997 and 2005 (based on anslysis I conducted on the blog before), we know that most students choose Geography, Business Studies, French and Biology for their optional subjects. The following are the most popular subjects, in order. (I should point out that after Accounting, the numbers taking any subject are quite low):

1. Geography
2. Business Studies
3. French
4. Biology
5. Home Econ.
6. History
7. Art
8. Construction
9. Physics
10. Chemistry
11. German
12. Accounting

I should also point out that there is a sizeable fall of about 50% in the numbers taking any subject after Home Economics. We can see that the top four (Geography, Business Studies, French and Biology) include one of Hist/Geog, one "Business" subject, one language and one science subject. I think that having (only) three of these "broad choices" alongside Maths, Applied Maths, CBEL and English would be a very rounded preparation before doing anything after second-level. And this might also be a better preparation for entering the labour market, which is what this argument is all about.

My hunch is that Geography, Business Studies, French, Biology and Home Econ are being chosen because they are easier exams to score more points from. I suspect that French is being chosen to get into NUI colleges, but that Home Econ would be a higher preference if the NUI language rule did not exist. Under the scope of my suggested curriculum-reform, Leaving Cert. students can still choose a language given that they have three optional choices. It could also be argued that having four (instead of three) compulsory choices might be fairer, in that it could be viewed as a more level playing-field.

What will Irish graduates do next year?

From teaching undergraduate classes, i do not have a great sense that final year students have worked out in detail their own personal recession recovery plans - clearly some have but as a general rule I do not think the majority are psychologically equipped for the market they are entering.

I guesstimate about half are actively thinking of doing masters degrees and that this will likely increase as the reality of the labour market hits home. This leaves a question about what the 15,000 or so Masters graduates will do. About 1,000 or so will do PhD's but its not clear what will happen the rest in the context of a public sector recruitment embargo and a very closed labour market. We are also clearly on the track of building a stock of Masters graduates that will become larger and larger as the recession persists. One of the traditional advantage that graduates have over non-graduates and older workers, labour mobility, is less relevant than it was in the 80's as the current recession is global. Furthermore, the downward wage adjustment channel is severely limited in the Irish context. This is for two reasons - firstly public sector salaries will adjust only very slowly and the savings are likely to be used to reduce the public deficit rather than hire more people. Secondly, private sector wage adjustment may simply be insufficient in the presence of low global demand and is also likely to be too slow due both to the wage bargaining process and the psychological resistance to wage cuts among both incumbents and (surprisingly, but verified in a lot of research) employers themselves.

The spectre of a growing number of people coming through Irish higher education institutions to take up positions on social welfare is a situation that simply needs to be stamped out. I will post as regularly as I can on research and policy responses to this issue globally and I urge anyone who is interested in this issue to keep their mind attuned to new and interesting thinking in this area and to either post material or alert me by email. Clearly, this is an issue that is being faced in many countries and looking closely at how countries in Europe, as well as countries with similar education systems and participation rates like Australia, Canada, US are adjusting is important.

Some proposals that have been considered include mass level graduate internship programmes across the public and private sectors, incentivisation of business start-ups, better mentoring, funding non-profit placements, enhanced career advisory services tailored to career advice in a contracting economy, developing pathways through which bright graduates can signal productivity such as graded work experience, training options that allow graduates to convert from disciplines that are now less attractive than they were when the person embarked on their degree. Others have simply argued that a "post-modern" generation will emerge from the universities that simply do not view progression in the labour market as a major source of self-esteem. In wilder moments, I have even heard a few people claim that this might contribute to a literary and cultural revival in some Irish cities. I do not have a great deal of sympathy for this view. Certainly, some good artists will emerge from this recession but the bulk of them would likely have been good anyway. The psychological costs of unemployment are far clearer than any putative benefits in terms of creativity.

Furthermore, it is important that groups involved in promoting welfare among young people put forward costed proposals rather than simply highlighting awareness of the issue.