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The value of college graduates to the Scottish economy

Scotland’s colleges make a crucial contribution to the Scottish economy. Each college is a major economic player in its own right – both at a national level and in the local communities that they serve. In many parts of Scotland, the sector provides vital employment opportunities that would not otherwise be available.

Scotland’s colleges spent over £6601 million in 2015/16, spending that supports economic activity across Scotland helping to create jobs and boost growth. However, the contribution of the college sector extends beyond simply the impact of its spending power. In addition to widening access to educational opportunities – potentially improving income equality and inclusive growth – colleges contribute to national economic growth through increasing human capital.

There is a body of evidence that measures the labour market benefits to an individual of education and training. Less emphasis has been placed on understanding how these effects impact on the wider economy.

This study aims to help fill this gap. We evaluate the economic contribution of college graduates from 2008/09 – 2015/16 to Scotland’s economy over the long-term. To do this, we make use of our detailed model of the Scottish economy.

Key Findings

  • For the period 2008/09-2015/16 graduate cohorts we estimate that:
    • The Scottish economy (as measured by GDP) will be better off by over £20 billion in present value terms (i.e. with future benefits discounted) over the long-term.
    • This corresponds to around an additional £55,000 boost to productivity for the Scottish economy per graduate.
    • The present value of the increase in public sector revenues is estimated to be £6.8 billion. Over the years studied, the total costs to the public sector of investing in these learners through nationally-recognised qualifications was approximately £2.4 billion – just 35% of the cumulative tax revenues generated over the long-term.
    • The investment is estimated to support 13,896 full time equivalent (FTE) jobs in present value terms.

Authors

James is part of the knowledge exchange team, which involves connecting academia to business, government, and the public. He has a Masters in Applied Economics, a degree in Mathematics, Statistics & Economics and is experienced in working on a wide range of projects for public and private sector clients.

Eleanor Malloy
Peter McGregor

Peter McGregor is an Emeritus Professor of Economics at the University of Strathclyde, and is a former Director of the Fraser of Allander Institute

Anna Murray
Andrew Ross
Picture of Graeme Roy, director of the Fraser of Allander Institute
Graeme Roy

Dean of External Engagement in the College of Social Sciences at Glasgow University and previously director of the Fraser of Allander Institute.