Tuesday, April 25, 2006

A recently published report by New Philanthropy Capital challenges the government's claim that City Academies offer donors an attractive investment in education. The City Academies have been particularly controversial in recent weeks because they lie at the heart of the 'cash for honours' allegations.

Only 27 academies have been set up so far. Of these, 10 are currently in their first year of operation. Of the remainder some are new schools, while some are replacements for pre-exisiting schools. In their most recent review of the programme, Price Waterhouse Coopers analysed this latter group, and found that GCSE grades (as measured by the percentage of pupils achieving 5 or more GCSE qualifications at grades A*-C) have risen in half of the schools following their conversion into Academies, and that grades have fallen in the other half of schools. While it's still early days for the programme, this is not a ringing endorsement.

Other measures are more positive. Stakeholders - pupils, parents - comment favourably on the learning culture, the attitudes of staff, and the quality of leadership in the Academies. If these qualities can, over time, translate into higher grades, then the Academies may yet turn out to be a good investment.

The running costs of Academies are comparable to those faced by conventional schools. Set-up costs are about £7m higher (because Academy buildings are often designed specifically to meet specialised pedagogical objectives). We know, from research by Gavan Conlon, that people who achieve 5 A*-C grades at GCSE typically earn around 11% more than those who don't (holding other things equal, and assuming that getting the GCSEs doesn't lead to getting further qualifications). Aggregated (and discounted) over a lifetime, that's worth around £50000. If, by changing from a school into an Academy, around 7 more pupils per year could achieve 5 A*-C grades at GCSE, then - over time - the investment could pay off. In year groups of 100, that means a 7% improvement in the performance measure. That's quite a demanding target to meet, albeit not an impossible one.

More interesting questions concern exactly what characteristics of Academies might deliver these benefits - and can these characteristics be obtained more cheaply than at present? Is it expensive new buildings that do the trick, or is it good leadership, or is it motivated teaching staff, or is it subject specialisation, or is it freedom from regulation?

Those philanthropists who are considering backing an Academy should bear all of this in mind. The Academies are not a sure-fire bet in the quest to improve educational standards. New Philanthropy Capital suggests that providing support for out-of-hours school activities, tackling bullying, and supporting special educational needs can all represent safer investments. The benefits of these alternative programmes - which are certainly less glamourous than Academies - have not been quantified in a way that makes it possible to compare them with the benefits of Academies, and without further evidence it would be difficult to concur completely with the New Philanthropy Capital view. But their report certainly poses the right questions.

Tuesday, April 04, 2006

Labour market rigidities cause unemployment. Rigidities are themselves often caused by institutions - those institutions may be unions, regulations, standards... or even, perversely enough, employment protection legislation.

There is ample and unambiguous evidence that employment protection legislation serves only to reduce employment. This evidence comes from many different countries, and over many different time periods. The reason is easy to surmise - the tougher is employment protection legislation, the more reluctant are employers to hire labour in the first place, because once hired it can't (easily) be fired.

The demonstrations in France are aimed at a relaxation of employment protection for young people. The policy is proposed specifically to attack a problem of high youth unemployment - and it's a policy that should work. The winners from the policy will be currently unemployed youths. The losers (and there will be some) will be young people who are currently in work, and who will lose out in terms of their job security.

The protests began with students - young people who most likely will find work and who up till now have been beneficiaries of excessive employment protection. We should not forget that - they are not being altruistic. They are not thinking of their less fortunate contemporaries. The latter need the new legislation in order to raise their probability of finding work.

One hopes that the French government will not capitulate in the face of protests by a curious coalition of privileged rent-seekers and the poor misguided and uninformed.