“ The most valuable of all capital is that invested in human beings;

1. EU-India SeminarReasons and Policies to Promote Lifelong Learning: the EU ExperienceFriedhelm Pfeiffer, University of Mannheim & ZEW MannheimNew Dehli, India 28 November 2006

2. “The most valuable of all capital is that invested in human beings; and of that capital the most precious part is the result of the care and influence of the mother” Alfred Marshall (1890, VI.IV.11)

3. Dimensions of Human Capital

4. cognitive skills mobility non-cognitive skills Dimensions of Human Capital Friedhelm Pfeiffer

5. The “Technology” of Lifelong Learning • Skills acquired in one period are available in later periods (self-productivity, recursive productivity) • Skills acquired in one period enhance the returns of later investments (direct complementarity) • Sensitive or critical periods (evidence form other disciplines: neurobiology, developmental psychology) • Early investments yield the highest returns • Further investment is necessary („lifelong learning “) Friedhelm Pfeiffer

6. Determinants of Lifelong Learning • Genetic endowment • Mother, family background • Peer groups • Educational institutions • Firms • Labor market Friedhelm Pfeiffer

7. Cognitive Skills • Memory of the brain, speed of information processing • General capacity of solving problems • Mathematical knowledge, etc.. • roughly 80 % of the cognitive skills are formed up to the age of six years (or even earlier) • Family background is crucial Friedhelm Pfeiffer

8. Non-cognitive skills • Motivation • Social Integration • Self-regulation („delay of gratification“, „resistance to distraction“) • roughly 70% of non-cognitive skills are acquired in the first 20 years • Family background and schooling are crucial Friedhelm Pfeiffer

9. Cognitive and Non-cognitive Skills over the Life Span/ Interventions Non-cognitive skills Cognitive skills 900 900 450 450 0 0 0 8 16 24 32 40 48 56 64 72 80 0 8 16 24 32 40 48 56 64 72 80 Age [years] Age [years] Basis Impulse 0 to 6 Impulse 12 to 18 Impulse 45 to 51 Friedhelm Pfeiffer

10. A Population of Heterogeneous Individuals Cognitive skills Non-cognitive skills 1,000 1,000 750 750 500 500 250 250 0 0 0 8 16 24 32 40 48 56 64 72 80 0 8 16 24 32 40 48 56 64 72 80 Age (years) Age (years) 99. Perzentil 90. Perzentil 75. Perzentil 50. Perzentil 25. Perzentil 10. Perzentil 1. Perzentil Friedhelm Pfeiffer

11. Returns to Investments in Skills of Individuals from Favourable or Disadvantaged Environments High cognitive skills Low cognitive skills 1,000 1,000 500 500 0 0 0 8 16 24 32 40 48 56 64 72 80 0 8 16 24 32 40 48 56 64 72 80 Age [years] Age [years] Basis Impulse 0 to 6 Impulse 12 to 18

12. Mobility • Law of increasing reductions in regional distance costs • Occupation • Employer/ Firm • Activity/ Job • Highest mobility after finishing school • The availability of attractive jobs is important • Mobility explains roughly 40% of the variance of wages Friedhelm Pfeiffer

13. Skill Formation over the Life Span

14. Simulation Model • Cognitive skills = f (cognitive skills in the previous period, non-cognitive skills in the previous period, investment, learning ability, depreciation) • Non-cognitive skills = g (cognitive skills in the previous period, non-cognitive skills in the previous period, investment, learning ability, depreciation) • Human capital = h (human capital in the previous period, cognitive and non-cognitive skills, depreciation) Friedhelm Pfeiffer

15. Skill Formation over the Life Span Human Capital 80,000 € 60,000 € 40,000 € 20,000 € 0 € 0 8 16 24 32 40 48 56 64 72 80 Age [years] Basis Impulse 0 to 6 Impulse 12 to 18 Friedhelm Pfeiffer Impulse 45 to 51

16. Equality of Opportunity and Lifelong Learning • Equality of opportunity has deep roots in Europe (for example French Revolution 1789-1799, Martin Luther 1483-1546: access to education for all) • Social partnership is important • Significant variation of educational institutions and the role of social partnership in European countries Friedhelm Pfeiffer

17. The Heterogeneity of Skills in Europe Source: OECD (2006), own calculations Friedhelm Pfeiffer

18. Impacts of Training Programs for Adults • Target population and program dose (intensity) • Indirect undesired effects sometimes large • The effects of government educational programs for adults sometimes are ambitious (alternatives should be discussed) Friedhelm Pfeiffer

19. Policies to Foster Lifelong Learning

20. Two sides of one coin: lifelong learning and technical progress • Fostering mobility after finishing school, social partnership and the creation of work • Labour market competition due to migration and globalization • Neurobiology: childhood is crucial for the ability of lifelong learning Friedhelm Pfeiffer

21. Thank you for your attention!