The analysis of the OECD published overnight depends crucially upon how greater inequality reduces the ability of the lower income families to invest in human capital.
The OECD theory of inequality and lower growth is there is a financing constraint because of inequality that reduces economic growth because of less human capital accumulation by lower income families.
Proportion of adults aged 25–64 years with an educational qualification of at least upper secondary level and tertiary level, 1991–2009
In a nutshell, not enough people are going to university. Apparently, the explosion in tertiary educational attendance over the last generation, an increase of about 150% for the adult population aged 25 to 64, was just not good enough.
But what about adults aged 25 to 34, recent graduates, how many of them are there?
There was an explosion of young New Zealanders in the late 1990s who qualified for a degree from a university or diploma from a Polytech.
Under the hypothesis of the OECD about financial constraints retarding the accumulation of human capital among the lower middle class – the fourth decile of the income distribution – even more young New Zealanders should have gone to university or Polytech.
Are there many New Zealanders left who are qualified and suited to tertiary education who do not go?
That is the crux of the OECD position: not enough lower-middle-class New Zealanders go on to obtain higher education and upgrade their skills because of financial constraints in a country was in interest free student loans, means tested student allowances, and the government subsidises for 75% of all tuition fees. Tuition fees only equal 25% of the actual cost and any one can get a student loan to cover this fee.
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