people and planet

2
with tertiary education, while those in medium and low
skill jobs are largely educated to the secondary level or
below. 15 These patterns are more or less replicated across
the sample of poorer and richer countries, suggesting
that the education segmentation of high and medium/
low skill work may be a general feature of economies
regardless of income.
Educational attainment is associated with higher
earnings within occupational categories, however.
Analysis of prime-aged workers in full-time employment
in the STEP countries shows that hourly earnings for
low skill work increase with educational attainment.
Among medium skill workers, educational attainment
is associated with an even greater increase in earnings.
High skill workers with tertiary education also earn
substantially more than those with upper secondary
attainment. On this basis, education expansion should
lead to increases in earnings across all occupational
groups regardless, but to a greater degree if it facilitates
access to higher skill occupations.
The case for expanding tertiary education in developing
countries is supported by recent evidence on labour
market returns to education. In contrast to earlier
research which found that the return to earnings was
highest for a year of primary schooling, more recent
global estimates show that the private returns to tertiary
education exceed those to both primary and secondary
education (Montenegro and Patrinos, 2014). This finding
is confirmed in a smaller sample of 25 low and middle
income countries (Fink and Peet, 2014).
EDUCATION CLOSES GENDER AND
SOCIO-ECONOMIC EMPLOYMENT DISPARITY
In many countries, labour market outcomes are
generally, and often significantly, worse among
women and those with disadvantaged socio-economic
backgrounds. Among the urban population of STEP
countries, working poverty among women is on average
double that of men, and in most countries is significantly
higher for those of low-socio-economic background
compared to more advantaged counterparts. Large
disparities are also found in many OECD countries, such
as Austria, Finland, the Republic of Korea and Switzerland,
where the incidence of low pay among women is
more than double that of men (OECD, 2016b). Wages
among those with low socio-economic background are
significantly below more advantaged counterparts in a
majority of OECD countries (OECD, 2015c).
Gender disparity in vulnerable employment and
informality, however, tends to differ by country and
region. Among Eastern European and Central Asian
countries of the STEP survey, informality is highest
among men, but is higher among women in Latin
American and sub-Saharan African countries. 16 In the
majority of countries, workers from disadvantaged
socio-economic backgrounds are more likely to work
informally (Chua, 2015).
Differences in education and skills can be a significant
source of disparity among disadvantaged groups.
In STEP countries, workers of low socio-economic
background on average have two years fewer of
education than those from a middle socio-economic
background, and three years less than those from a
high background. Literacy skills are also significantly
lower than advantaged socio-economic groups in most
countries (Chua, 2015).
Gender disparity in educational attainment and literacy
tends to vary by country. Among urban areas in the
STEP sample, female workers in Eastern Europe and
Central Asia tend to have both higher educational
attainment and literacy levels than their male
counterparts, while the opposite is true in Latin America
and sub-Saharan Africa. 17 In Ghana, for example, men
have over two more years of education than women, and
score over 40 points higher on a 500 point literacy scale.
More broadly, disparities in advanced economies across
the world are lower, with men averaging 0.25 years
more of education, compared to one year more among
developing countries (Barro and Lee, 2013). Among the
22 PIAAC countries, differences in literacy between the
genders are marginal, although men have slightly higher
numeracy scores (OECD, 2013).
Given the influence of education and skills on labour
market outcomes, closing education disparities can
increase access to decent work among disadvantaged
groups. For the STEP countries, analysis conducted for
this report suggests that if workers from low socioeconomic
backgrounds had the same education as
more advantaged counterparts, disparity in informal
employment between the two groups could shrink
by 37% and that in working poverty by 39%. 18 Within
countries where group differences in employment
outcomes are statistically significant, the effect of
equalizing education outcomes is even stronger. In
Colombia, Ghana, Kenya and Viet Nam, educational
attainment explains nearly all the disparity in informal
60
CHAPTER 2 | PROSPERITY: SUSTAINABLE AND INCLUSIVE ECONOMIES