DIAGNOSTICO DE LA COOPERATIVA CREDIPRES AREQUIPA

One of the most influential frameworks within which the relationship between investment in education and economic growth is explored, is the human capital theory. This is where education is recognised to play a pivotal role in producing human capital with knowledge and skills that, when they are utilised, affect overall productivity leading to economic development. Lucas (1988) argues that there is a positive relationship between the education of the workforce and overall capital productivity and the:

“higher the level of education of the workforce the higher the overall productivity of capital because the more educated are more likely to innovate, and thus affect everyone's productivity” (Lucas, 1988 cited by Ranis and Stewart, 2000, p.202).

Similarly, it has been argued that high educational level of individuals affects also the productivity of the people with whom they work (Perotti, 1993). This leads to both high individual returns and wider social returns. In addition, the emergence of new growth theories (Lucas, 1988; Romer, 1986) with their underlying assumption on the ‘endogenous’ character of technology – based

13 on human capital accumulation – have provided a central role to knowledge and especially to new knowledge production. Thus, the doctorate reflects an even higher investment in years of education and a further educational investment and human capital accumulation, which is assumed will entail benefits for its holder (Becker, 1964). As a result of policy makers’

endorsement of this theory, an increasing number of PhD holders is observed worldwide (Cyranoski et al., 2011; Auriol, 2007), while policies at national and international level have encouraged increasing investment in research (EC, 2003a).

These theories have consequently underpinned significant developments in European policy. These include the Lisbon strategy and the so-called KBE, which link with higher education and research initiatives, relating them to economic growth and national competitiveness. In addition, evidence from OECD countries (Luintel and Khan, 2005; Gemmell 1997) show that

“on average the flow of new-to-the-world knowledge is likely to be higher in countries that engage more scientists and engineers in the knowledge producing sector” (Luintel and Khan,2005, p.22).

However, the assumptions of human capital theory have been challenged and debated. While higher education expansion is a fact (Teichler, 2001), the relationship between employment, productivity and economic growth is still obscure (Ashton and Green, 1996). As Keep and Mayhew (2004, p.310) stated:

“The main assumptions that underlie the case for expansion have not been probed with sufficient rigor and major policy decisions have been made on evidence that is at best, incomplete and at worst, weak or contradictory”.

14 In the UK, there are no clear links between the proportion of the workforce with degrees and economic growth rates (Keep and Mayhew, 1996; Keep et al., 2002) or productivity (Wolf, 2003; Elliott, 2004). Evidence for Greece also shows that despite the increasing enrolment and attainment of higher education degrees since 1980s (Katsikas and Therianos, 2004), it is

characterised by low labour productivity and slow employment growth while it has experienced robust economic growth (OECD, 2008). In light of

comparative research from a number of countries, Brown et al. (2008, p.i) note that:

“the human capital assumption on which government policy rests is no longer fit for purpose”.

Thus, it is argued that a highly skilled workforce will not lead to national economic competitiveness, individual prosperity and social justice if all countries follow the same route (ibid) since the notion of competitive

advantage, based on investment to education, will cease to exist. Thus, the KBE advocates are confronted with:

“evidence (that) fails to support the argument that today’s economy requires a significant let alone exponential, increase in demand for highly skilled workers” (ibid, p14).

From a human capital theory perspective and with the assumption that individuals are rational agents who aim at maximising utility, the pursuit of a doctorate can be perceived as an educational investment destined to provide better employment, low likelihood of unemployment, high financial benefits (lifetime earnings and wage premiums), good working conditions and job satisfaction after the PhD. Many studies on the impact of doctoral education

15 have investigated the monetary value of doctoral education (O’Leary and

Sloane, 2004; Rudd, 1990; Williamson, 1981) overlooking non-financial

benefits of the doctorate for its holder (see Raddon and Sung, 2009). After all, while the doctorate is perceived as instrumental for enhancing employment prospects, many studies have found that the motivation for a doctorate is primarily intrinsic triggered by personal interest of researching a topic in depth (Vitae, 2010, 2012; Hodsdon and Buckley, 2011; Purcell and Elias, 2006).

Within this approach, individuals with the ability to choose the country and institution of studies would select the option that would provide better returns to their investment so that the benefits would be higher than the costs.

However, there are some caveats to this assumption, especially in the case of doctoral education. Individuals might not be aware of the potential returns to the PhD, especially under the changing context of doctoral education in the labour market, as will be shown in subsequent sections. Considering that the PhD qualification requires a substantial period of time and is pertinent to specialised knowledge that can become obsolete especially in terms of the natural science and engineering (S&E), then employment prospects can be altered even during doctoral training. At a more collective level, human capital accumulation is claimed to entail macroeconomic implications implying a positive relationship between a highly skilled workforce and economic growth. However this has been challenged due to the lack of empirical evidence as highlighted earlier.

16 While many studies in Greece have explored the private returns to education (see for example, Tsakloglou and Cholezas, 2001; Papapetrou, 2006; Magoula and Psacharopoulos, 1999) and the link between human capital and economic growth (see Tsamadias and Prontzas, 2011; Psacharopoulos and Kazamias, 1985), findings suggest a positive relationship between educational investment and individual returns. PhD graduates have only recently been included in relation to education returns in Greece (Mitrakos et al., 2010; Prodromidis and Prodromidis, 2007) possibly due to the absence of data and labour market information about this highly skilled workforce in Greece and the traditional perception of the doctorate as an academic qualification. The human capital of the study participants is explored in terms of their earnings and job satisfaction by sector and country of employment – they are not compared with other educational levels – but also in terms of private returns beyond financial value, such as personal and professional development of the individual resulting from the doctorate.