Dr Matthew Dickson from the Centre for Market and Public Organisation has been awarded £126,685 from the Economic and Social Research Council (ESRC) for research into the economics of education and pay.

The research aims to help answer important questions facing individuals and the government, questions such as:

• To get the best education for my child, when and where should they begin their schooling?
• If I stay in education a year longer, how much should my wages increase?
• Where should I work – the public or the private sector? How will this decision affect my earnings, career prospects and job security?  

By looking at the introduction of the government's policy permitting children in England to commence their education at age three, it is possible to estimate the effect that early education has on reading, writing and maths results at age seven.  

A further element of the research will involve estimating the causal effect of education on wages by exploiting differences in education levels resulting from the raising of the school-leaving age and also differences due to time preferences of individuals which are arguably unrelated to their ability. The return to education is of great importance in light of the plan to raise the school leaving age to 18. 

The research will also look at the value of employment in the public and private sectors, not just in terms of earnings levels, but also their range and growth, as well as job security, using a complex statistical model to account for unobserved differences between individuals.

Speaking about the implications of the research, Dr Dickson said:

‘Understanding by how much an additional year of education increases an individual's earnings is important not only for the individuals themselves but also for the government as it seeks to ensure that all individuals develop to their potential and provide the skills that the economy and society need to flourish.

This research is particularly important at the present time, with the minimum education leaving age set to raise to 17 in 2013 and then 18 in 2015. The research results will quantify the earnings return to these additional educational investments and will suggest pathways for future research into how and why education raises future earnings.’

 The project will run until the end of March 2011.