12/21/2012 12:11 pm ET Updated Feb 20, 2013

Has Education Become a Victim of the Financial Crisis?

There is a widespread perception that education systems in OECD countries have suffered severe budget cuts when the financial crisis hit in 2008. However, a look at the data reveals a much more nuanced picture, at least so far. For example, among 31 industrialised countries with comparable data, the only ones that saw a reduction in educational spending between 2008 and 2009 were Belgium, Estonia, Iceland, Israel, Italy, Japan and the United States. And even in all but one of these countries, the share of national income spent on education grew (because GDP fell faster than educational spending). The only country in the industrialised world in which spending on education as a share of national income fell is Israel, where the economy grew, but spending on education was cut.

So in sum, all but one country spent more of their national income on education in 2009 than they had in 2008, and countries like Denmark, Ireland and the Russian Federation increased their spending on education by 5 percent, or more even while their national economies shrank by 5 percent or more. That is powerful evidence for the priority that education has in the policies of nations and in the lives of citizens -- who often dedicate not just significant time to education but also a growing share of private money.

But the fact that learning outcomes have remained fairly flat over the last decade, in most countries at least, raises questions whether all the additional money has been well spent. The first thing the data show is that spending on education exhibits a common pattern across the globe: In each country it rises sharply with the level of education and it is dominated by teacher salaries. This is not a surprise when looking at the main determinants of expenditure, particularly the place and mode of educational provision. The vast majority of education still takes place in traditional school and university settings, with similar organization, curriculum, teaching style and management. The labor-intensiveness of traditional education accounts for the predominance of teachers' salaries in overall costs and their resultant steady increase. Differences in student/teaching staff ratios, staffing patterns, teachers' salaries, teaching materials and facilities influence cost differences between levels of education, types of programs and types of schools.

A look at how those factors have evolved over time also suggests that much of the increase in spending on education may not have been motivated primarily by pedagogical considerations, but simply reflects the fact that institutional arrangements tend to adapt to changing demographic conditions very slowly, at best. For example, many countries have not been able to adjust staffing levels to a rapidly declining student population, so class sizes have declined and costs have risen, without automatically changing and improving the nature of teaching and learning.

OECD data show that at the primary and lower secondary levels of education, the salary cost of teachers per student increased between 2000 and 2010 in nearly all countries. In fact, it increased by a third and one-quarter, respectively, on average among countries with available data in both years: from USD 1,733 to USD 2,307 at the primary level and from USD 2,273 to USD 2,856 at the lower secondary level. At both the primary and lower secondary levels of education, the increase was mostly influenced by the changes in two factors: teachers' salaries and estimated class size. Between 2000 and 2010 teachers' salaries increased on average by 16 percent at the primary level and by 14 percent at lower secondary level, whereas estimated class sizes decreased on average by about 14 percent at the primary level and by 7 percent at the lower secondary level.

It seems that countries have been able to mobilize additional resources. It is not clear that we have yet figured out how to invest resources more effectively.