Achieving more growth and prosperity through education

Empirical studies worldwide show a positive correlation between education and economic growth. "Education is the knowledge fuel for the economic development of an economy," says Tobias Thomas, Director of the economic research institute EcoAustria. "By improving its education structure, Austria could achieve more growth and prosperity," explains Thomas. A simulation by EcoAustria using the PuMA macro model (Public Policy Model for Austria) shows that shifting the population shares from low to medium and from medium to high qualifications by 1 percentage point each, i.e. between 850 and 950 people per year, would increase the gross domestic product by 0.2 and 0.3 percent respectively in the long term. Investments and private consumption would also increase. The public sector would also benefit from more revenue in the form of taxes and duties. The primary balance would improve by around EUR 150 million in the long term.

In order to increase the potential for growth and prosperity, the efficiency of the public education system should be improved first and foremost. Adjusted for purchasing power, Austria spends 11,730 euros per pupil per year and thus achieves 492 points in the PISA test. In comparison: the Dutch achieve 508 points with 9,100 euros per year and the Finns achieve 523 PISA points with 8,750 euros per year, which is a European top score. "Despite all the structural differences between countries, existing efficiency reserves in education should be examined more closely, as they show that better performance is possible without increasing public spending," says Thomas. In addition to this, the framework conditions for charitable involvement in education can be improved. The fact that in Austria only donations for science and adult education are deductible in the education sector, but not for early childhood and school education, is hardly understandable against the background of high returns on education, especially in the early childhood sector, according to the conclusion of a study published today by EcoAustria for the Association for Charitable Donations.