Miriam Hederman O’Brien Prize 2017

The presentation of the 2017 Miriam Hederman O’Brien prize awarded by the Foundation for Fiscal Studies will take place on the Monday 2nd October from 8:00 -9:30am in the Grafton Suite, The Westbury Hotel, Dublin 2.

The aim of the prize is to recognise outstanding original work from new contributors in the area of Irish fiscal policy, to promote the study and discussion of matters relating to fiscal, economic and social policy and to reward those who demonstrate exceptional research promise. The prize forms an important part of the Foundation’s overall objective of promoting more widely the study and discussion of matters relating to fiscal, economic and social policy.

The shortlisted papers are shown here and past winners here.

There will be tea / coffee from 8.00 as well as an opportunity to view stands promoting some of the work and applications nominated for the Award.

The event is free but please register in advance to info@fiscal.ie.

Save the date: September 7 – Policy Forum on Higher Education Funding

I am organising a policy conference on the above topic to be held at the RIA on Dawson Street from 9.30-12.30 on Thursday, September 7.

The main focus will be on the potential role of income-contingent student loans in HE funding.

The morning will begin with short presentations by five speakers, including Bruce Chapman (Australian National University), Lorraine Dearden (Institute for Fiscal Studies and University College London), Charles Larkin (Trinity College), Senator Aodhan O Riordain (to be confirmed) and myself. This will be followed by a 60-90 minute discussion session. The event will be chaired by Frances Ruane (ESRI).

I’ll post a detailed programme here when it’s finalized.

Update: Senator O Riordain has confirmed and the final programme is available here.

Recent Research on Income-Contingent Student Loans

(This is a joint post with Darragh Flannery of UL and Kevin Denny of UCD).

Income-contingent loans (ICLs) for students were one of the options proposed by the Cassells Report on Future Higher Education Funding when it was published last year (see here). The topic has been back in the news again in recent weeks because of the dissemination of a paper[1] by Shaen Corbet and Charles Larkin, which claims to show that an ICL could not work in Ireland.

Two of us (Doris and Flannery) have done research directly in the area of ICLs – indeed Doris’s research ended up being used by the Cassells Expert Group to provide illustrations of how an ICL might work in Ireland. We both found, using different data sets and different ICL parameters (income thresholds, repayment rates etc.) that the discounted value of loan repayments would be about 75% of the loan values, even when accounting for graduate emigration.[2] Under these repayment rates, there would be no problem operating an ICL in Ireland.

The third poster (Denny) has written papers on the determinants of participation in higher education (HE), the returns to education and related topics and so has a strong research interest in the effects of funding on access to HE.

We were all surprised by the reports of Larkin and Corbet’s results and so went off to read the paper. This had added interest as the research appears to be influencing policy makers.  Given this context and with apologies for the length of the post, we have decided to make our assessment of it public.

Continue reading “Recent Research on Income-Contingent Student Loans”

Irish higher education, post Brexit

Two interesting think pieces in the Irish Times today. One by TCD’s Brian Lucey on the challenges and opportunities facing Ireland’s Higher Education sector after Brexit, and another by UCC’s Phillip O’Kane on creating a single International University of Ireland made of the best bits of the higher education landscape. 

The Deparment of Finance and the ESRI have a briefing paper modeling the impact of Brexit on the Irish economy. Their takeaway:

the level of Irish output is permanently below what it otherwise would have been in the absence of BREXIT.

‘Nuff said.

Higher Education Funding Links

There have been lots of contributions since the Cassells Report issued. It’s probably worth putting them all in one place. If I’ve missed some, please pop them in the comments.

The Cassells Report itself.

The reaction to the report

Carl O’Brien has a great series of articles on the subject. Here’s one: College funding explainer: The three options to pay for third level

Michael O’Regan: Senators criticise proposal for student loan scheme

The reaction to the reaction

Brian Lucey: Third level financing fails to paint the whole picture

Niamh Hourigan: Student loans will make graduates flee. Face it, tax is the best way to fund third level

Lorraine Courtney: State continues its war on youth, denying them a brighter future

Kim Bielenberg: Facing a higher degree of debt – students could graduate owing €20,000

Darragh Flannery and John Cullinan Study now, pay later? Please read the terms and conditions

Brian Hayes Why this Dáil may actually grasp the nettle of higher education funding

Paying the price for free education

Below is my Sunday Business Post column from this week, reposted with permission.

**

Today, I’m writing as an academic and as the Acting Chair of the Higher Education Authority, because I think it’s really important to respond to the recent publication of the Cassells Report on the funding of higher education.

You might not know much about the HEA. It has three main jobs. It disburses about €1 billion in funding to the higher education institutions of this State, it regulates the higher education sector, and it provides policy advice to the Minister for Education and Skills.

The government, the HEA, and all the higher education institutions work within a national strategy around higher education, which takes us out to 2030.

The strategy we as a society have adopted for higher education until 2030 is to push for further and higher education for everyone who wants to go, regardless of their ability to pay at the moment they are admitted. Education should be freely available to those that want to avail of it.

But education is not free. Education has never been free to provide. As I said, the HEA spends over €1 billion of your money on it, and this is nowhere near enough to provide the kind of system envisaged in the strategy to 2030.

Continue reading “Paying the price for free education”

Study Now, Pay Later? Please Read the Terms and Conditions.

Posted on behalf of Darragh Flannery (UL) and John Cullinan (NUIG).

The Cassells report was finally published last week with various options for funding higher education outlined. With the dust settled, now may be an appropriate time to take stock of a few important issues. The debate around this topic has largely taken a full state funding approach versus a student loan approach. The student loan scheme suggested as one option within the report is an Income Contingent Loan (ICL) system, whereby graduates borrow for the costs of their education from the State but do not make any repayments towards this debt until they reach a certain income threshold. However, the discussion around this option has been muddied a lot within the debate. There are a variety of student loan systems in operation around the world; some good and some bad. The point of this post is to simply summarise some of the key design parameters within an ICL scheme and highlight the implications of varying these parameters. These have rarely featured in the public debate but can have significant implications for graduates and will thus require deep consideration if an ICL scheme is to be seriously considered.

Firstly, it must be noted that an ICL scheme entails that some students may never pay back any of the debt they owe. For example, if somebody leaves third level education and chooses not to work for the rest of their life, they repay nothing.  In this instance, the taxpayer would ultimately foot the cost of this individual’s education. From an efficiency viewpoint this makes sense as it provides a system where there is burden sharing at its core.  Students that benefit from third level education through higher earnings pay back some of the cost of that education. Society pays through taking on the default risk of those that do not repay fully or anything at all; this particular point seems to have been completely lost in the debate recently. From an equity viewpoint, an ICL scheme provides free access to higher education at the point of entry to every young person in the country.  It has been argued that this is the same with a household mortgage style loan system – the house is free at the point of entry but you pay for it over the next thirty years or so. However, the key difference is that under an ICL system, if an individual makes no repayments due to some spell of unemployment, nothing is repossessed and there is no impact on your future credit worthiness. From both an efficiency and equity viewpoint it can therefore be argued that there is some sense in an ICL system. However, like any change in policy, the devil will be in the detail.

Two separate studies have previously looked at this issue for Ireland, my own ESR paper with Cathal O’Donoghue here and more recent work by Aedín Doris of Maynooth University and Bruce Chapman of Australia National University here. Also, the appendix of the Cassells report presents some sensitivity analysis around certain parameters. While these go into much finer detail around the issue of ICLs, we will simply summarise some of the key parameters and highlight why there are important. These include the debt liability imposed on students, the specific income threshold to be set, the interest rate attached to the loans and the possible capping of repayment burdens.

The first issue that would have to be addressed is the level of debt a student is burdened with for every year they are in higher education. This has to strike a balance between having the ability to provide adequate funding for the third level institutions and not proving extremely burdensome for graduates. This can take the form of a blanket fee for all those attending higher education as outlined in the Cassells report; however, a more efficient way would be to have some variation in this debt across students. This could be linked to the cost of educating the student and/or the potential lifetime earnings from pursing different subject fields. Australia has adopted a system of this type whereby those wishing to study subjects that generally provide a higher return in the labour market such as medicine and dentistry face a slightly higher debt burden compared to those studying in fields such as humanities or nursing.

To be seen as progressive an ICL must have an income repayment threshold that reflects the fact that only those that benefit from third level education should be responsible for some of the cost. The danger of setting the threshold too low is that it places an extra expenditure burden on those graduates that are not earning very much, despite having gone through four years of higher education. Australia has set the threshold at which graduates begin to repay their debt at the average industrial earnings. The Cassells report mentions a lower threshold of the average wage of new graduates; presumably to ensure more graduates pay something towards the cost of their education.

With regard to the interest rate, the level at which this is fixed will help determine both how long it takes for graduates to pay off their debt and the overall state subsidy. An interest rate that is lower than the rate of inflation may significantly increase the subsidy the state provides on the loans by allowing graduates to ‘inflate’ away their debt. If the interest rate is set too high, the debt burden may increase rapidly and lead to longer repayment periods for graduates. A sensible approach would be to either index the interest rate on the loans to the consumer price index or the state cost of borrowing.

Capping the repayment burdens of graduates on an annual basis has seldom arisen in discussion but would form an important part of illustrating the difference between an ICL scheme and personal loans from the banking sector. Such a mechanism would limit the repayment amounts any one graduate may face in a particular year, no matter what their income level is. For example, if a graduate earns well in excess of the repayment threshold of the system, the repayments they make in that year are capped at a certain proportion of their income. Bruce Chapman of Australia National University, the architect of the much referenced Australian ICL system, suggests that this helps to avoid unduly harsh repayment burdens in any given period and could be fixed at around 8-10% of a graduate’s income.

Arguments have been put forward that increased funding for higher education should be provided through increased general taxes, as is seen in some European countries. The Cassells report acknowledges this by outlying two alternative funding options whereby state funding to higher education would be increased significantly and either the student contribution fee would be removed or maintained it at current levels.  However, given the suggestion that an additional €600 million euro per annum is needed in the higher education sector to meet the current demographic and quality challenges, it is highly unlikely either of these options is feasible or desired politically.

There are other important issues within an ICL system that deserve more attention than I have scope for here. These include the potential impact of emigration on repayments and whether the higher education grant system is restructured concurrently. However, for the majority of graduates that may be impacted by such a reform the specifics of debt amounts, income thresholds, interest rates and the capping of repayment burdens are of huge importance and require careful consideration by policymakers. They also deserve more consideration in the public debate around higher education financing.

World university rankings

This is one way to try to boost your position in the world university rankings.

Another would be to shift admittedly very scarce resources from administrative to frontline staff, so as to keep class sizes under control; remember that the university’s core function was always to provide an excellent undergraduate education, and value those members of staff whose dedication made that possible; and value the outputs of research, instead of the financial inputs into it.

Tom Kettle, 1880 – 1916

In 1909 Tom Kettle was appointed the first Professor of the National Economics of Ireland at University College, Dublin.
He was in Belgium running arms for the National Volunteers when the war broke out in 1914. What he perceived as the barbaric Prussian assault on European civilization prompted him to apply for a commission with the Royal Dublin Fusiliers, which he was awarded in 1916.
He was killed in action at Ginchy (Picardy) during the Battle of the Somme on 9th September 1916.
In the spring of 2006 the late Gerry Barry, the RTÉ broadcaster, organized a public meeting (in the former House of Lords chamber at College Green) to mark the 90th anniversary of Kettle’s death. He asked me to contribute a piece on Kettle’s work as an economist.
Ten years on, and a century after Kettle’s death, I thought readers might be interested in the brief essay I wrote for the occasion.

More details of his life are available in the excellent Wikipedia article on him:https://en.wikipedia.org/wiki/Tom_Kettle.

Garret FitzGerald Lecture and Autumn School

UCD College of Social Sciences and Law will host the Garret FitzGerald Lecture and Autumn School on Monday 19th October, in the UCD Sutherland School of Law. The daytime School (from midday) will focus on the significance of the social sciences. The evening Lecture will be delivered by Professor Cass R Sunstein,Harvard Law School, on the theme ‘Is Behavioural Science Compatible with Democracy?’. More details and bookings here.

Save the Date: September 30 Conference on Higher Education Funding in Maynooth

On Wednesday, September 30, we are holding a one-day conference on ‘Higher Education Funding: Drawing on the International Experience’ in Maynooth.

The context for this conference is the debate on how to fund higher education in Ireland. In 2014, the Minister for Education established an Expert Group on Future Funding for Higher Education, and the motivation for the conference is to inform the discussion about the choice of funding options available; we have a particular interest in the interaction between funding mechanisms and differential access to higher education along socioeconomic lines.

International speakers include Sara Goldrick-Rab of the University of Wisconsin-Madison, who has written extensively on the issue of higher education funding in the US; Claire Crawford of Warwick University and the IFS, who has written several detailed analyses of the UK system; and Bruce Chapman of the Australian National University, whose name is particularly associated with income-contingent student loans, both in terms of his academic research and his role as policy advisor to many governments.

Local speakers include Rory O’Donnell of NESC and Delma Byrne of Maynooth University.

The conference will be open to all. I’ll post further details here in the coming weeks.

Update: Full details are now available here.

Economics, new and improved

Many readers of Irish Economy are likely to be aware of a project to rethink the teaching of Economics, linked to the Institute for New Economic Thinking, and organised by a committee chaired by Professor Wendy Carlin of UCL. Some people associated with this blog, including Kevin O’Rourke, are also involved in this work.

A beta digital textbook (‘The Economy’) has very recently been put online and there is a useful explanatory video and a blog.

On my preliminary and (so far) partial reading of ‘The Economy’, it achieves its goal of being strikingly different to the standard first-year textbook. It places at the centre of the story familiar ideas that students and the public expect to feature in Economics and understand better through Economics, including capitalism, technology, living standards, the environment, institutions, and property rights before turning to the more abstract aspects of microeconomics. All the bells and whistles of digital publication are there too including hyperlinks to many of the readings. And of course it’s all freely available. The organisers are seeking user (student and faculty) feedback via a Facebook page and it seems there is supplementary material to follow in due course.

Outward-oriented economic development and the Irish education system

 

Irish Educational Studies recently published a special issue to commemorate the landmark report Investment in Education (which was commissioned in 1962 and released in 1965).  The report’s finding that half of all children were leaving school by the age of 13 generated newspaper headlines and created the environment for Donogh O’Malley’s ‘free education’ initiative of 1966.  An appendix to the report provided information on the educational attainment of the population in 14 European countries (including seven in Eastern Europe) as well as in the US, Japan and Israel.  No equivalent statistics could be produced for Ireland.  Questions relating to educational attainment were included in the Irish Population Census from the following year.   This issue of Irish Educational Studies includes two witness accounts by key players, Áine Hyland, an RA to the report team, and Seán O’Connor, first head of the Development Branch of the Department of Education.  The issue, entitled Investment in Education and the Intractability of Inequality, also contains four academic papers.  Mine is available here.  The abstract reads as follows:

Most studies of the relationship between education and economic development focus on the line of causation running from the former to the latter.  The present paper studies how the pattern of Irish development has influenced the structure of the Irish education system.  The first section sets out the economic context of late industrialisation within which Investment in Education was commissioned and which determined the reception that the report received.  The report’s release would be followed shortly thereafter by a series of policy measures that would expand secondary-school enrolment and graduation rates and massively increase the demand for third-level places.  Later sections analyse the subsequent evolution of Ireland’s binary system of tertiary education and the recent attention devoted to science, technology and innovation policy and the ‘fourth level’ (postgraduate) sector.  Concluding comments focus on the continuing relevance of the perspective embodied in Investment in Education for the surprisingly high numbers who continue to leave the Irish education system without a Leaving Certificate qualification.

 

Fully-funded Economics PhDs at QUB

Fellow economic historian Chris Colvin has brought my attention to the fact that the Management School at Queen’s University Belfast has three fully-funded scholarships for full-time PhD students in Economics, starting October 2014. In terms of thesis topics, they will consider all areas of economics, finance or management but they are particularly keen to recruit  students in the following areas:

  • game theory and mechanism design with some emphasis on the economics of networks and institutions;
  • economic history, including business and financial history; anthropometrics and demography; health, wealth and inequality over the long run; politics, democracy and growth; the economic history of partition in Ireland;
  • health economics, labour economics, and the economics of education;
  • long-term development and the economics of crime;
  • behavioural/experimental economics with some emphasis on social learning.

(As someone working on wealth and inequality over the long run and increasingly interested in the economics of partition, I’d particularly encourage applications in those two areas!)

The good news for successful applicants is that the studentships, which each last for 3 years, include both university fees and annual stipend of £13,863 per annum. The closing date for applications is Friday 20 June 2014 – full details are here.

Rebranding Trinity College Dublin

April the first seems like as good a day as any to open a thread on the recent TCD rebranding initiative, which according to Brian Lucey cost the cash-strapped university around €100,000. A few questions arise:

Has it occurred to TCD that it actually has a very strong brand (how I hate that word), and that this may in fact be the reason that it does reasonably well in reputation-based surveys?

Isn’t the new shield just a little bit chintzy, and was the old one not much nicer?

If they are going to make a big deal about the book in the new crest not necessarily being the Bible of the old one, is there not a problem with the name of the College itself (my kids pointed that one out before collapsing in a fit of giggles)?

Isn’t the whole idea of “rebranding” a university just a little bit second division, and does this exercise not risk damaging the reputation of the institution?

Is there any chance that having spent €100,000 on the exercise, the promised staff consultations will be any more than a box-ticking exercise?

University rankings, 2014

Always a controversial topic, the latest university rankings by QS have been published. More details here. The aim is to identify the top 200, meaning something of an abrupt stop once they get to 200. (I feel the need to put a disclaimer here that I post this not because I stand over the ranking’s exact methodology, but rather rankings such as these are used by both prospective students and policymakers, hence they are important.)

Of interest to this readership, the ranking of Economics Departments in Europe is here. Trinity features in the 51-100 cohort and UCD in the 100-150. (Digression: nice to see a popular ranking recognise the bounds of uncertainty, although this may not be the best way to do it.) Six of the top seven Economics departments in Europe are British, with one each from Italy, Sweden, the Netherlands, Spain, Switzerland and France also in the top dozen.

9th-level Ireland has a handy table of Ireland’s top ranking departments across all disciplines from 2011 to 2014. Four departments (all in TCD) are in the top 50 in their discipline. A further 18 are in the 51-100 group (including three law departments).

Irish Economic Policy Conference 2014: Economic Policy after the Bailout

Organised jointly by the ESRI, Dublin Economic Workshop, UL, and UCD’s Geary Institute, this year’s policy conference (see previous years here and here) will be on the theme of economic policy after the bailout. This conference brings policy makers, politicians, civil servants and academics together to address this question of national importance. The venue will be the Institute of Bankers in the IFSC. (Click here for a map).


Date: 31st January 2013

Venue: Institute of Bankers, IFSC

Programme

9:15 – 10:45: Plenary: The Impact of the Crisis on Industrial Relations

Chair: Aedín Doris (NUI Maynooth)

  • Kieran Mulvey (Labour Relations Commission) Prospects for Pay and Industrial Relations in the Irish Economy
  • Shay Cody (IMPACT Trade Union) “The impact of the crisis on industrial relations – a public service focus”
  • Michelle O’Sullivan/Tom Turner (University of Limerick) “The Crisis and Implications for Precarious Employment’”

10.45-11.15: Coffee Break

11:15 – 12:45: 2A. Migration and the Labour Market

Chair: Philip O’Connell (UCD Geary Institute)

  • Piaras MacÉinrí (UCC) ‘Beyond the choice v constraint debate: some key findings from a recent representative survey on emigration’
  • Peter Muhlau (TCD) “Social ties and the labour market integration of Polish migrants in Ireland and Germany”
  • Alan Barrett (ESRI & TCD) and Irene Mosca (TCD) “The impact of an adult child’s emigration on the mental health of an older parent”

2B. Economics: Teaching and Practice

Chair: Ronan Gallagher (Dept of Public Expenditure and Reform)

  • Brian Lucey (TCD): “Finance Education Before and After the Crash”
  • Liam Delaney (Stirling): “Graduate Economics Education”
  • Jeffrey Egan (McGraw-Hill Education) “The commercial interest in Third Level Education”

12:45 – 1:45: Lunch Break

1:45 – 3:15: 3A. Health and Recovery

Chair: Alex White, TD, Minister of State

  • David Madden (UCD) “Health and Wealth on the Roller-Coaster: Ireland 2003-2011”
  • Charles Normand TCD) and Anne Nolan (TCD & ESRI) “The impact of the economic crisis on health and the health system in Ireland”
  • Paul Gorecki (ESRI) ‘Pricing Pharmaceuticals: Has Public Policy Delivered?”

3B. Fiscal Policy

Chair: Stephen Donnelly TD

  • Seamus Coffey (UCC) “The continuing constraints on Irish fiscal policy”
  • Diarmuid Smyth (IFAC) ‘IFAC: Formative years and the future’
  • Rory O’Farrell, (NERI) “Supplying solutions in demanding times: the effects of various fiscal measures”

3:15 – 3:30: Coffee Break

3:30 – 5:00: Plenary: Debt, Default and Banking System Design

Chair: Fiona Muldoon (Central Bank of Ireland)

  • Gregory Connor (NUI Maynooth) “An Economist’s Perspective on the Quality of Irish Bank Assets”
  • Kieran McQuinn and Yvonne McCarthy (Central Bank of Ireland) “Credit conditions in a boom and bust property market”
  • Colm McCarthy “Designing a Banking System for Economic Recovery”
  • Ronan Lyons (TCD) “Household expectations and the housing market: from bust to boom???”

This conference receives no funding, so we have to charge to cover expenses like room hire, tea and coffee. The registration fee is €20, but free for students. Please click here or on the link below to pay the fee, then register by attaching your payment confirmation to an e-mail with your name and affiliation to emma.barron@ucd.ie. [Block bookings can be made by purchasing the required number of registrations and then sending the list of names to emma.barron@ucd.ie]

Please click here to pay the registration fee.

An updated economics syllabus after 44 years would be an asset

I don’t normally post my indo columns here, but I think readers of this blog may be interested in this one. The column follows on from last week’s discussion on this blog about the leaving certificate economics exam and its problems, but focuses on trying to secure a constructive outcome if possible.

I think we have to recognise two sets of constraints here.

  1. Second level teachers have mixed ability classes and can’t do an undergraduate level of work in their classrooms. The objective of leaving certificate economics is not to produce economists per se but rather economically knowledgeable citizens who study this subject as one among many subjects. Teachers and textbook writers are constrained by the 44 year old syllabus, but have to do their best with what they’ve got. So teachers will be rightly annoyed when reading comments about how potentially damaging the current syllabus is in terms of economic understanding.
  2. Third level economics lecturers like Kevin, Aedin and others rightly point out the deficiencies in the current exam content and structure and feel they should have some input into what is taught and why. Both sides agree the syllabus as is is not fit for purpose.

The solution, at least it seems to me, is to take the 2005 revised economics syllabus and update it together in a forum like the business studies teachers’ association, and present that to the NCCA. If everyone was happy enough with it, I don’t see why it couldn’t be rolled out fairly quickly with some inservice training for teachers.

It’s one thing to criticise and point out flaws when they exist, and Kevin and Aedin in particular were right to do so. But if we actually profess to know something about this subject, I think we should have a go at helping teachers to fix those flaws, if we can.

Academic promotions in Spain

I am not sure that these findings are surprising, but quantifying these effects is very useful. It also seems worth mentioning that Italy has just introduced a system of involving non-Italians in their academic appointments committees. And that it is probably not surprising that the UK, which has a competitive model, is so successful when it comes to ERC grants and other quantitative measures of academic success.

Measuring Youth Unemployment

The problem of youth unemployment has rightly been highlighted as one of the major issues facing European countries today.  The newspapers have fastened on the shocking statistic that the unemployment rate among Spaniards and Greeks aged 15 – 25 is about 50 per cent, while the rate for the EU as a whole is about 20 per cent.  These are alarming numbers, but they are also somewhat misleading.

As Stephen Hill pointed out in a piece in the Financial Times on June 24th, the unemployment rate may not be the best measure of labour market conditions among young people who have opportunities to stay in the educational and training systems rather than entering a depressed labour market.  For this reason, an alternative measure, the unemployment ratio, has gained currency.

The conventional unemployment rate is  the numbers ‘unemployed’ as a proportion of the ‘labour force’.  The ‘labour force’ is the sum of the employed and unemployed.  The ‘unemployed’ are those actively seeking work, but not at work. (For young people it is of interest to break unemployment down into those ‘looking for first regular job’ and those who are ‘unemployed having lost or given up previous job’.)

The problem with using the  unemployment rate to measure labour market conditions among young people is that the denominator does not include those who are in the educational system or on full-time training courses.  During a recession, the higher the proportion of a youth cohort that stays on in school or college or in training, the smaller the labour force and the higher the unemployment rate. This is perverse.

By using the whole cohort as the denominator, the unemployment ratio avoids this pitfall and it may be argued that it therefore provides a clearer picture of hardship being caused by the lack of employment. (Of course this is subject to the reservation that increased educational participation may involve putting square pegs in round holes, with some young people taking courses in which they have no interest.)

The limitations of the unemployment rate as a measure of labour market conditions among the youth population is acknowledged by Eurostat, who now publish both the ratio and the rate for the population aged 15-24.  (Their recent figures for Ireland for 2011 are low and may not reflect the latest Census returns.)

The distinction between the unemployment rate and ratio certainly matters.  Data in the recently-released 2011 Census of Population volume This is Ireland Part 2 show the population classified by ‘principal economic status’. These reveal an unemployment rate of 38.7 per cent among the population aged 15-24 compared with an unemployment ratio of 14.2 per cent. While the ratio of 14.2 per cent gives no grounds for complacency, it is less alarming than the headline rate of almost 40 per cent.

It is perhaps even more important to note that the unemployment ratio has not risen as dramatically as the unemployment rate since the onset of the recession in 2008. The Figure displays the three concepts based on the 2006 and 2011 Census data.

(The Table at the end provides more details.)

Whereas the unemployment rate rose by 140% the ratio rose by 90%.  Thus, the rate tends to overstate both the level of unemployment among young people and the rate at which it has risen.

It may, however, be objected that the unemployment ratio includes all those who are not in the labour force in the denominator but excludes discouraged workers and similar forms of disguised unemployment from the numerator.  This bias would certainly be significant among older workers, who are more likely to cease looking for work and to drop out of the labour force because no jobs are available.  Its effect on the youth data, however, is smaller because labour force categories other than ‘employed’, ‘student, and ‘unemployed’ are relatively unimportant among the young.  In 2011 less than 2 per cent of population aged 15- 24 are classified as ‘looking after home/family’!

None the less, to take account of ‘dsicouraged workers’ it is worth looking at another concept that has gained some currency .  This is the NEET ratio. It refers to the proportion of the population that is Not in Employment, Education or Training.  To calculate this ratio for Ireland I have assumed that those in ‘(full-time) training’ are classified as ‘students’ in the Census.  The resulting ratio must, by definition, fall between the unemployment ratio and the unemployment rate.  From the Figure we can see that it lies closer to the unemployment ratio. Moreover, it has risen less rapidly than either the unemployment rate or ratio.   In 2011 the NEET ratio was ‘only’ 65 per cent above it 2006 level.

It is striking that the widely-used unemployment rate is so much higher, and has risen so much more, than the alternative – and arguably better – measures of the situation in the youth labour market.

The reason why the unemployment rate overstates both the level and rise in Irish youth unemployment is the high level of educational participation and its marked increase over the past five years. The proportion of the 15-24 year-old population in the educational system rose from 50.1 per cent in 2006 to 60.5 per cent in 2011.  While not all of the additional years of schooling will be as productive as we would wish, being in the educational system is less wasteful than being unemployed.  This aspect of the adjustment to the present crisis is concealed by the conventional youth unemployment rate.

None the less, we cannot lose sight of the collapse of employment among the youth population.  In 2006 39.5 per cent of the population aged 15-24 was in employment.  By 2011 this percentage had fallen to 22.5.  Among those aged 20-24 the rate declined from 60.0 to 39.0.  While the youth unemployment crisis may not be as severe as suggested by the headline youth unemployment rate, it is a crisis.

Paul Mooney on higher education

Paul Mooney has a long op-ed on higher education in today’s Irish Times.

Mooney taught at DCU and was president of NCI. That experience colours his assessment and recommendations. As I have argued time and again, some universities should focus on research and the academic side of education while other universities should focus on the more vocational end of third-level education. Mooney’s one-size-fits-all assessment and recommendations are more appropriate for the teaching end of higher education. Differentiation and specialization are a better way forward. Some Irish universities should lose the right to grant PhDs while other universities should minimize undergraduate numbers.

Mooney first discusses working hours. Teaching hours are a fraction of total working hours — a small fraction at the research end of the university spectrum and a larger fraction at the teaching end. That gradient can and should be made steeper: Many university lecturers are incapable of decent research while at the same time many good researchers are buried in teaching and administration.

Research is multifaceted. Some research is really applied, immediately leading to profits for companies and photo opportunities for politicians. Such research is best done in companies and consultancies. There is also blue skies research, curiosity driven stuff that is truly appreciated by only a handful of people and that perhaps one day might lead to something useful. Such research is best done in universities and national laboratories. Blue skies research does not benefit Ireland. It benefits humankind. It satisfies our thirst for knowledge. It feeds applied research. Blue skies research is a global public good. As one of the richest countries on the planet, Ireland has a duty to contribute.

Ireland can, of course, decide to free-ride and hope that other countries will provide the public good called fundamental research. But there are local spillovers too. The financial reward for top academics is small relative to their capacities and outside opportunities. A low teaching load (and hence a lot of time for research) is part of the reward for top academics. Top academics make top schools. Top schools attract top students. Top students join or form top companies, which prefer to be close to big pools of talent.

Like so many others, Mooney seems to think that technological progress is all about the natural sciences and product innovation. In fact, process innovation is at least as important. With a few exceptions, successful Irish companies are better at process innovation than at product innovation. RyanAir did not invent a new plane. Guinness and KerryGold convinced the world that their product is best (without changing the actual product). Ireland would make a bigger contribution to the global stock of knowledge if it would focus on what it is good at — and that is in the realm of ideas rather than things. The graduates of Ireland’s business and economics schools definitely command a higher wage than the graduates of its engineering and natural science schools.

Mooney also calls for (improved) measurement of performance. I could not agree more.

Research Prioritisation Report

According to an Irish Times story by Dick Ahlstrom and Fiona Reddan the government has approved the report of the Research Prioritisation Steering Group in identifying 14 priority areas for state-funded research. The report itself is here.

One might hope (though probably in vain) that this would prompt some wider debate. For example, might at least some policy makers be even slightly concerned to question:


  • the merits or otherwise of an increasingly centralised model of state planning for innovation,
  • the continued privileging of scientific and technological knowledge which current policy advances,
  • the extent to which the relentless shift towards commercialisable state-funded research is in conflict with a core original rationale for this policy: namely the provision of public goods—those which are by definition not commercialisable (current policy can look a lot like socialising the costs, while privatising the benefits), and:
  • the further opportunities for rent-seeking, by both industry and academics, this sort of exercise creates and embeds, and relatedly, the high political value thereby assigned to demonstrating (by innovators, no less!) compliance with hierarchy, obedience to instructions and the uncritical acceptance of a consensus policy, aka ‘groupthink’?

Dublin is the 8th best place in the world for students

at least, according to the latest ranking by QS.

They’re quiet about the method, but if you click on any of the cities, you will find what matters to them: Good universities, international mix, local employment, cost of living and fees, and quality of living.

As far as I know, this is the first such ranking so it is too early to tell whether Dublin’s high rank will increase the influx of foreign students.

Higher education reform

The HEA has published its plans for reforming higher education in Ireland. A high level summary is here. There are two more substantive documents (here and here) that partly overlap. There are two core ideas. First, “technological universities” are introduced. Presumably, these will replace the “institutes of technology”. This is to large degree a matter of relabelling. If this satisfies the demands to have a university in every county then so be it. Ireland would follow the international trend to call each and any 3rd level education entity a “university”. Besides, some (many?) of the ITs already grant PhDs and are thus universities in all but name.

The second idea is more controversial. The HEA wants consolidation, through associations, clusters and mergers. Indeed, technological universities will come from a “consolidation of two or more institutions”. On the one hand, it is high time to rationalize the bewildering number of institutions in higher education. I have argued that there too many, small economic departments. Similarly, Irish business schools are too small to credibly support a broad curriculum. There is a fixed cost to running a department, and small department spent a disproportionate amount of time on administration.

On the other hand, scale for scale’s sake is silly. The HEA is not particularly clear about what research and teaching should (not) be consolidated and why.

I would argue that, for research, 2-3 centres per subdiscipline is plenty. For teaching, 3-4 locations for a bachelor’s, and 2-3 for master’s and PhD is enough — per discipline. For those activities, quality beats location. I’d rather talk to / be taught by a good researcher / professor than the one next door. Silicon Valley is not because it is close to any old university, but because it is close to Stanford. For evening and weekend classes, and more vocational training, you do want close ties to local businesses and therefore a denser network of locations.

UPDATE: The Independent reports on the race to become the first Technological University.

The Examiner reports that the president of Cork IT thinks that TU are too university-like. Cork IT is, I presume, free to remain an Institute of Technology. As it would be one of few ITs, it would be free to re-define the IT concept in Dr Murphy’s image.

The Examiner also notes that “distance from home is a major factor in third level participation”. I would argue that people should be prepared to travel for a quality education.

Tilburg ranking of economic departments, and Economist on MBAs

Another day, another ranking, this time of Economics departments by Tilburg University.

The global ranking has Vrije U in 77th position. You’ll need to use the “ranking sandbox” to discover that UCD is 157, TCD 233, NUIM 503, and NUIG 696. DCU, DIT, UCC and UL are not ranked.

This ranking’s method is simple. Papers are attributed to the department at the time of publication, rather than to the current department of the author. Quality weighing is simple too: publications are given a weight 1 if in a listed journal, and 0 otherwise. The list has 36 journals (although another 32 can be added in the sandbox). The list contains all of the obvious journals, and omits quite a few journals that are equally respectable — and why use a subjective criterion for respectability anyway when objective quality measures are readily available?

The Tilburg ranking thus compares badly to the IDEAS/RePEc one, but the results are not that different: Vrije U is 76, UCD 198 (Geary) or 225 (Econ dept), ESRI 252. Other Irish departments do not make it to the top 5%.

Both rank the total output of the department, not correcting for the number of faculty. Large schools are thus on top.

UPDATE:

The new MBA ranking by the Economist is out too. UCD ranks 38th, and is the only Irish entry. The method is a lot more sensible than the Tilburg one.

Pay for performance in academia

Last week, I linked to two papers, one showing that students prefer to enroll in highly ranked universities, and another one showing that a generalization of the Hirsch index partly explains who gets tenure where.

Brian Lucey led me to another paper, by Daniel Hamermesh, to be published in Economic Inquiry. Hamermesh links remuneration to performance, showing that more prolific authors earn more (but this effect levels off). The relation between citations and pay is more intriguing. At the lower end of the pay range, the total number of citations matters. At the higher end, the most cited paper dominates. This makes sense: Prizes are given for the one paper that changed everything.

What has this to do with Ireland? In the USA, academic contracts are individual. In Ireland, contracts are collective. Pay is set by grade and seniority. This implies that only the more productive and more influential Irish academics can get a competitive offer from the USA. Recent cuts in net pay have priced a larger fraction of Irish people into the international market. Irish universities thus run the risk of losing their best people, and we have seen some of that already.

THE University Rankings

You can’t but admire the person who dubbed Times Higher Education.

The new THE University Rankings are out. Confirms earlier rankings: Ireland is slipping. I won’t repeat the whole discussion again. Just click on the “rankings” tag below to reread previous posts and comments. Here’s a summary: The metric is imperfect, but people base their decisions on it nonetheless.

Note that they changed their method again (for the better, although using Z-scores is statistically inappropriate for a Pareto distribution), so current and past ranks are incomparable.

University Rank 2011 (Rank 2010)

TCD         117            (76)

UCD         159            (94)

UCC         301-350    (>200)

NUIG        351-400    (>200)

NUIM       351-400    (>200)

The subject rankings will be published in two weeks (the PR genius was at it again).

The new IDEAS/RePEc data are out (economics only). Ireland is slipping there too. See graph. This cannot be explained by a drop in numbers. See graph. Liam Delaney and Kevin O’Rourke have left, Colm Kearney has announced his departure, and there will be more, but IDEAS/RePEc has yet to catch up with that.

Similarly, whatever people say in the media, austerity measures and employment control frameworks are likely to impact future university rankings, but I doubt they can explain much of the current rankings, as the objective measures (publications, citations) reflect the past rather than the present.

As with the QS rankings, reputation plays a big role. There is probably a spillover from bad news about Ireland in general to Irish universities specifically.

Media coverage:

Quinn in Irish Examiner

Boland in Irish Examiner

Irish Times

RTE

Irish Independent