Melbourne Institute of Applied Economic and Social Research - Page 1

Melbourne Institute NewsSeptember 2012

History of the Institute from 1996Page 1

A Decade of Shaping Debate—Two Months to Next Outlook Conference

Page 3

Global Financial Crisis Insights in Latest HILDA Survey

Statistical ReportPage 4

Investors Prepare for New Wave of Share Buying as Confidence Grows

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Australian Economic ReviewPage 6

Getting Doctors into the BushPage 7

Pay for Performance Schemes Can Worsen Performance

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Study Advocates Tough Measures for High School Dropouts

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www.melbourneinstitute.com

History of the Institute from 1996Peter Dawkins began his term as Director of the Institute in February 1996, the same month that Alan Gilbert became the University’s Vice-Chancellor. The two leaders each held their positions for around a decade. In August 2006, ‘Melbourne’ was formally added to the name of the Institute, a change initiated by Peter Dawkins but one that was consistent with Alan Gilbert’s emphasis on ‘The Melbourne Agenda’.

The early Dawkins years were devoted to setting a research framework and then obtaining funds to deliver the outcomes. The initial focus was on the two interrelated themes of economic performance and social outcomes, later to be encapsulated in the motto ‘hard heads, soft hearts’.

Funding gradually improved and was assisted by a faculty seeding loan repayable over five years. The federal government’s 1999 Green Paper on research and research training foreshadowed greater accountability in research funding which was to be based on defined metrics. The university and faculty budget procedures were altered to reflect research performance which benefited the Institute and allowed a significant increase in staff.

Major research projects in the late 1990s included the IBIS collaborative research program in enterprise dynamics, a project on the efficiency and equity effects of tax reform, and work on business cycles.

The early years of the new millennium saw the commencement of the Household, Income and Labour Dynamics in Australia (HILDA) Survey, led by Mark Wooden, which has become one of the most significant research programs in the social sciences in the last 50 years. A behavioural microsimulation model of the Australian tax and social security system was developed, with the acronym of MITTS. Both the HILDA and MITTS projects were developed in association with

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and Early Childhood Development. By 2012, around 70 staff were employed in the Institute, including seven full-time at the professorial level.

In this brief overview of the history of the Institute from 1996, emphasis has been placed on new initiatives. But the Institute is well known, especially by the general public, by activities that have been ongoing for 40 or so years: publications such as Westpac – Melbourne Institute Survey of Consumer Sentiment and Westpac – Melbourne Institute Indexes of Economic Activity, The Australian Economic Review and Poverty Lines.

The full history of the Institute will appear in Ross Williams’s book The Policy Providers: A History of the Melbourne Institute of Applied Economic and Social Research 1962–2012. It is to be published by Melbourne University Press and will be available from 1 November 2012.

History of the Institute from 1996(continued)

the Department of Family and Community Services (DFaCS). Under a retainer-type contract, the Institute began to undertake other social policy research for DFaCS. The Institute was a joint participant in the establishment in 2002 of the Intellectual Property Research Institute of Australia (IPRIA).

In 1999 the Canberra Public Economics Forum was launched. It was modelled on the Institute’s quarterly Melbourne Forum which began in 1997. In April 2002 the first Economic and Social Outlook Conference was held, organised in association with The Australian newspaper.

For the first time in the Institute’s history professorial appointments were made to provide research leadership to support the Director. Management practices evolved to meet the growth in staff numbers with the setting up of a senior management group. In 2003 Tony Cole was appointed as Chair of the Advisory Board on the retirement of Peter Jonson after a decade of service. Relocation to the Alan Gilbert Building in 2004 solved the accommodation problem, at least for a few years.

Peter Dawkins left the Institute in April 2005 to move to positions in the Victorian government and in 2011 to the vice-chancellorship at Victoria University. During his tenure as Director, revenue rose from $1.5 million to $10.2 million and there was a commensurate increase in output.

A number of leadership changes occurred over the period 2005 to 2010. John Freebairn was appointed as Director for a two-year period, on secondment from the Department of Economics. Stephen Sedgwick was appointed as Director from August 2007, but resigned in mid-2009. Mark Wooden was Acting Director for two periods. The current Director, Deborah Cobb-Clark, took up her position in April 2010. Unlike in some earlier times when changes in the directorship were very disruptive, the Institute continued to prosper. This owed to the system of devolved research leadership, the continuity in the academic staff heading the different areas and the competence of the directors.

A major new area of research is Health Economics under the leadership of Tony Scott. The key feature of the research is a longitudinal survey of doctors, labelled MABEL, an acronym for Medicine in Australia: Balancing Employment and Life. The project is providing important findings on the dynamics of the medical workforce. In 2011 a new research program in the Economics of Education and Child Development was established with funding from the Victorian Department of Education

Melbourne Institute

Directors and

Acting Director

Professor John Freebairn Professor Stephen Sedgwick

Professor Peter Dawkins

Professor Mark Wooden Professor Deborah Cobb-Clark

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Highlights include a morning session on the first day of the conference, when Professor Ian Harper from Deloitte Access Economics, Mr Gary Banks AO from the Productivity Commission, and the Director of the Melbourne Institute Professor Deborah Cobb-Clark will examine how Australia can respond to economic challenges, including the two-speed economy. On the second day of the conference one of the highlights includes a discussion on productivity and innovation with Professor John Daley, Chief Executive Officer, Grattan Institute, Dr John Edwards, Board Member, Reserve Bank of Australia and Visiting Fellow, Lowy Institute for International Policy, and Professor Beth Webster, Professorial Research Fellow, Melbourne Institute and Director, Intellectual Property Research Institute of Australia.

As has been the case since the inaugural Towards Opportunity and Prosperity Conference in 2002, registration for this conference is extremely popular and those interested in attending should contact Emma Craw: telephone (03) 9035 4672 or email <melb-conf@unimelb.edu.au>.

Past Conferences

This is the eighth such Economic and Social Outlook Conference held jointly by the Melbourne Institute and The Australian at 18-month intervals since the inaugural Towards Opportunity and Prosperity Conference in April 2002. This was followed by Pursuing Opportunity and Prosperity in 2003, Sustaining Prosperity in 2005, Making the Boom Pay in 2006, New Agenda for Prosperity in 2008, Road to Recovery in 2009 and Growth Challenge in 2011.

For more information, visit the conference website at <www.melbourneinstitute.com/miaesr/events/conferences/Outlook_2012/conference_outlook_2012_default.html>.

For close to a decade the Melbourne Institute – The Australian Economic and Social Outlook Conference has been shaping and informing social and economic debate and in a little over two months it will occur again.

‘Securing the Future: How Australia Can Thrive in a Volatile World’ is the theme of this year’s conference that will seek to expand on how Australia can capitalise on its present relative economic strength to ensure it meets the future prepared.

The format has established itself as the nation’s premiere economic and social public policy conference, providing a unique forum bringing together leading politicians, bureaucrats, academics and non-government organisation representatives.

Every 18 months Australia’s leading politicians, academics and economists speak at this conference. This year confirmed speakers include The Hon Wayne Swan MP, Deputy Prime Minister and Treasurer, Senator Penny Wong, Minister for Finance and Deregulation, The Hon Dr Craig Emerson MP, Minister for Trade and Competitiveness and Mr Gary Banks AO, Chairman of the Productivity Commission.

Issues to be explored by the two-day conference will include ageing, population, economic growth, health reform, education, the Asian economy, Europe and financial stability, fiscal choices, homelessness, tax, trade and industry policy, and innovation.

The conference will take place on Thursday 1 November and Friday 2 November 2012 with a conference dinner on the evening of 1 November. Also a book, by Professor Ross Williams, marking the fact that this year is the 50th anniversary since the foundation of the Institute will be launched prior to the conference dinner.

A Decade of Shaping Debate—Two Months to Next Outlook Conference

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Skilled, Full-Time Workers Aged 25–44 Hit Hardest by Job Losses during GFC

The increase in job loss precipitated by the GFC was greatest for skilled, full-time workers aged between 25 and 44. The HILDA Survey also found that the increase in the dismissal rate due to the economic downturn was highest among workers in the construction and professional services industries, while sales workers, particularly those working in retail and wholesale trade industries, actually experienced a decline in the rate of job loss.

This data is contained in the Labour Market Outcomes section of the latest HILDA Survey Statistical Report, which also includes an analysis of people who are employed versus non-employed; changes in wage levels; how often people change jobs and why; differences between hours worked and work-hours preferred; household joblessness; and job satisfaction. Some additional findings in this section include:

• Household joblessness has declined substantially as an economic and social issue for Australia over the 2001–2009 period, even with the increase in unemployment in 2008–09.

• Job-poor households continue to account for a sizeable proportion of households and the issue of intergenerational transmission of joblessness is still an important issue.

• Average levels of job satisfaction have changed little between 2001 and 2009, with most people being satisfied. The aspects of the job that workers are least satisfied with are pay and hours of work.

The lead author of the study, Associate Professor Roger Wilkins, commented: “The GFC appears to have had a greater impact, at least initially, on workers usually thought to fare best in the labour market — highly educated prime-age workers.”

A detailed picture of how Australia coped during the global financial crisis (GFC) has been provided by the latest Statistical Report from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, produced by the Melbourne Institute.This year’s wide-ranging report has an emphasis on the implications of the GFC and on the health of Australians. The HILDA Survey is Australia’s only large-scale nationally representative longitudinal household survey which interviews the same households and individuals each year, showing how Australian lives have changed over time. The Melbourne Institute’s Associate Professor Roger Wilkins is the report’s lead author.

Global Financial Crisis Insights in Latest HILDA Survey Statistical Report

“Since its creation in 2001 the HILDA Survey has been providing valuable insights that allow a deeper understanding of a wide variety of issues that affect Australian lives,” Associate Professor Wilkins said.

“This volume continues the practice of presenting an overview of what is available in the data and providing an indication of some of the types of analyses that can be undertaken with it. A particular focus this year is on the implications of the global financial crisis for Australia.”

The report has been divided into ‘Part A: Annual Update’, which focuses on changes in key aspects of life

Australians’ Levels of Life Satisfaction Remain Steady through Financial Crisis

Average satisfaction with life in Australia has remained stable over the nine-year period to 2009, while older people and teenagers report the highest levels of life satisfaction. This data is contained in the Life Satisfaction, Health and Wellbeing section of the HILDA Survey’s latest Annual Statistical Report, which presents analyses of the many and varied aspects of household and family life covered by the HILDA Survey over the period 2001 to 2009.

The Life Satisfaction, Health and Wellbeing section of the report also includes articles that address respondents’ assessments of their psychological wellbeing and physical health; satisfaction with family relationships and aspects of family life; the types of people with a shortfall in their social support networks; and people’s participation in the labour force and education sector.

Some additional findings in this volume include:

• The aspects of life people feel most satisfied with are the ‘local’ ones: their own homes, their neighbourhood and how safe they feel.

• For men, average levels of overall life satisfaction are lower for those who consider themselves to be prosperous, than for those who consider themselves either reasonably comfortable or very comfortable.

The lead author of the study, Associate Professor Roger Wilkins, commented on these findings: “Consistent with overseas studies, the HILDA Survey shows that the retirement years are very satisfying for many, at least while health holds up.”

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in Australia, and ‘Part B: Feature Articles’, which analyses specific topics in more detail. Part A includes findings on:

•Households and Family Life (changes in family structures; changes in marital status and marital satisfaction; parenting and work–family stress; child care issues; and people’s major life-events in the past year);

• Incomes and Economic Wellbeing (people’s relative position in the distribution of household incomes; a description of the extent and nature of poverty; people’s reliance on welfare; financial stress experienced; and a study of expenditure on household products and services);

•Labour Market Outcomes (an analysis of people who are employed versus non-employed; changes in wage levels; how often people change jobs and why; differences between hours worked and work-hours preferred; household joblessness; and job satisfaction); and

•Life Satisfaction, Health and Wellbeing (assessments of psychological wellbeing and physical health; satisfaction with family relationships and aspects of family life; the types of people with a shortfall in their social support networks; and people’s participation in the labour force and education sector.)

Part B includes nine feature articles that examine the prevalence and difficulties caused by health conditions; health care utilisation; child health and health care utilisation; health care expenditure and private health insurance; expectations about health and length of life; hours of work and job mobility; the stability of personality traits; employment transitions of mothers; and determinants of subjective wellbeing.

Families, Incomes and Jobs, Volume 7: A Statistical Report on Waves 1 to 9 of the Household, Income and Labour Dynamics in Australia Survey is available from <www.melbourneinstitute.com/hilda/Reports/statreport.html>.

Household Incomes Grew Substantially Despite GFCAverage household incomes increased substantially in the 2008–09 financial year, despite the economic downturn that began in the latter stages of 2008. The HILDA Survey found that the various bonus payments made by the Australian Government in late 2008 and early 2009, as part of its fiscal stimulus package, counteracted the negative effects of the GFC, acting to increase median household income by $2802.

The HILDA Survey data also show that the biggest beneficiaries of these bonus payments were people in lone parent families, who averaged $2681 in equivalised payments. This data is contained in the Incomes and Economic Wellbeing section of the HILDA Survey’s Annual Statistical Report, which also includes an analysis of relative income poverty, welfare reliance, financial stress and household consumption expenditure. Some additional findings within these sections include:

• Average living standards have increased over the nine-year period since HILDA began in 2001.• There has been a substantial decline in the rate of receipt of income support payments since 2001; however, the

economic downturn commencing in late 2008 did lead to a sizeable increase in welfare reliance.• The most commonly reported financial problem is the inability to pay utility bills on time, followed by the need to ask for

financial help from friends or family, followed by the inability to pay the mortgage or rent on time.

The lead author of the study, Associate Professor Roger Wilkins, commented: “The HILDA Survey provides powerful insights that increase Australia’s knowledge capital on a wide variety of subjects. This particular data shows that household incomes have increased substantially over the last decade, and this continued in 2008–09, despite the economic downturn and the associated increase in unemployment.”

Household Income Levels Affect Access to Dental CareA person on a low income is less likely to have visited a dentist in the last two years than a person on a high income. The HILDA Survey shows there is a strong association between dental visits and socio-economic factors, including income, labour force status and educational attainment. Particularly notable is the role of income, which was not a significant factor in doctor visits. The findings are consistent with the relatively low levels of government funding for dental health care compared with GP visits, which are either subsidised or fully funded by the federal government through Medicare.

This data is contained in the Health Care Utilisation section in Part B of the latest HILDA Survey’s Annual Statistical Report. Some additional findings within this section include:

• Few concession-card holders incur an out-of-pocket expense for doctor visits, but nearly half of other people do incur an expense.

• Women are more likely than men to hold private health insurance (PHI), while people living in Western Australia and South Australia are relatively less likely to hold PHI than people living in other states.

• Average levels of parent/guardian-reported child health are higher in couple households than in lone parent households.

The study’s lead author, Associate Professor Roger Wilkins, said: “The HILDA Survey indicates that Medicare has played an important role in improving access to doctors, but access to dental care remains quite poor for low-income groups.”

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Investors Prepare for New Wave of Share Buying as Confidence Grows

Australian Economic Review: September 2012The

AustralianEconomic ReviewVolume 45 Number 3 September 2012

The Governance of a Fragile EurozonePaul De Grauwe

Industrial Relations Reform: Chasing a Pot of Gold at the End of the Rainbow?Jeff Borland

Contributed Articles

Dutch Disease in Australia: Policy Options for a Three-Speed EconomyW. Max Corden

Dynamic Pricing and the Peak Electricity Load ProblemPaul Simshauser and David Downer

Policy Forum: Intergen+10: Ten Years of the Intergenerational ReportsAnthony Scott, Deborah Cobb-Clark and Philip ClarkeDavid Gruen and Duncan SpenderPeter McDonaldMark CullyRafal Chomik and John PiggottHenry Ergas

Data SurveyIntroducing ‘Journeys Home’Mark Wooden, Andrew Bevitt, Abraham Chigavazira, Nancy Greer, Guy Johnson, Eoin Killackey, Julie Moschion, Rosanna Scutella, Yi-Ping Tseng and Nicole Watson

For the StudentUsing Psychology to Improve Economic PolicyRoss Gittins

I Want to Be an Economist: A Rejoinder to Ross GittinsJeff Borland

In the September issue of the Australian Economic Review, Professor Paul De Grauwe from the London School of Economics argues that monetary unions are inherently fragile which has implications for the governance of the Eurozone. Professor Max Corden updates his work on the Dutch Disease affecting the Australian economy and presents policy options for a three-speed economy.

Professor Jeff Borland examines the economy-wide effects of changes to Australia’s industrial relations system in the 2000s and concludes that the changes had only a small effect on economic performance.

The Policy Forum contains papers presented at the conference convened to review the Commonwealth Government’s intergenerational report after 10 years. Issues covered include fiscal sustainability (Dr David Gruen and Duncan Spender from Treasury), population and

immigration (Professor Peter McDonald, Mark Cully), pensions (Rafal Chomik and Professor John Piggott) and aged care (Professor Henry Ergas).

In an article on electricity pricing, Professor Paul Simshauser and David Downer argue the case for smart meters and dynamic pricing as ways to moderate price rises.

A team from the Melbourne Institute, led by Professor Mark Wooden, explains a new longitudinal study that is tracking the experience of those facing housing difficulties.

Ross Gittins and Professor Jeff Borland debate the role of psychology and behavioural economics in the economist’s tool kit.

The September issue of the Australian Economic Review is available from <wileyonlinelibrary.com/journal/aere>. For more information, email Professor Ross Williams AM, <rossaw@unimelb.edu.au>.

A recent report reveals that the rally in sharemarkets has buoyed confidence about future prospects, but shareholders have threatened to dump boards over excessive executive pay.

Share owners are gaining confidence that solid earnings will overcome ongoing global economic uncertainties and expect their investments to perform well, according to the latest quarterly Global Proxy – Melbourne Institute Shareholder Confidence IndexTM survey which was released in August.

The overall shareholder confidence index rose by 2.6 per cent to 106.7 in the latest quarter, compared with the previous survey in May. The index has risen steadily since the end of 2011 and is now 14.1 per cent above the value of a year ago. The latest upturn comes on the heels of a strong six-week share rally, which has resulted in survey respondents believing that price volatility has receded. The expected confidence component of the overall index — which summarises expectations of return, volatility and trading intentions — rose by 7.1 per cent in the quarter compared with a previous 2 per cent decline.

Improved perceptions of share performance, however, have done little to ease investors’ concerns about the remuneration paid to senior executives. Some 68.4 per cent of survey respondents said they would be more likely to vote against the board’s re-election if a company receives a second strike this year on the adoption of the remuneration report. Just 9.6 per cent said they would be less likely to vote against the board and 6.6 per cent said they would abstain. Those who did not record a preference totalled 15.5 per cent.

Asked if they would be more or less likely to vote against pay proposals if their company already had recorded one strike at last year’s annual meeting, 53.2 per cent said they would be more likely. In addition, 23 per cent of respondents said that their vote would depend on the proposals put to the meeting, 17.4 per cent said they would be indifferent and 6.5 per cent said they would be less likely to vote against the remuneration report.

For more information about the latest edition of The Global Proxy – Melbourne Institute Shareholder Confidence IndexTM, see our website at <www.melbourneinstitute.com/miaesr/publications/indicators/global-proxy.html> or email Professor Guay Lim, <g.lim@unimelb.edu.au>.

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Getting Doctors into the Bush

City doctors would need a salary increase of up to $200,000 to entice them to work in some country areas, a Melbourne Institute study has determined.

The research, ‘Getting Doctors into the Bush: General Practitioners’ Preferences for Rural Location’, investigated what incentives and compensation were needed to entice GPs to shift to rural locations.

Nearly 4000 GPs were asked to choose between their current employment and two hypothetical job offers. The fictitious jobs included various working hours, town sizes and locations, overtime responsibilities, general staffing levels and levels of likely social interaction.

Sixty-five per cent of respondents said they would not quit their current position for any of the country jobs. The research found incentives equivalent to 130 per cent of annual earnings — or about $237,000 — would be required for GPs to accept a job in a remote, inland town with poor social interaction and a big workload. An increase of about 64 per cent of a doctor’s current average annual salary — or roughly $116,000 — would be required to encourage them to a basic job in an inland town with less than 5000 people. Moving to an inland town with between 5000 and 20,000 people would require incentives of at least 37 per cent of current earnings, or roughly $68,000.

Lead researcher Professor Tony Scott, from the Melbourne Institute, said the desired compensation varied according to the practice location and workplace conditions.

“If on-call is low and hours worked do not change, the job becomes more attractive and the compensation required is less,” he said.

A Senate inquiry is currently investigating how existing incentive programs affect the recruitment and retention of country doctors. Professor Scott said governments should tailor incentive programs to specific regional areas.

“Designing schemes to encourage doctors to locate and remain in remote and rural areas requires an understanding of the various factors that motivate doctors’ decisions.”

“Incentive programs are currently based on the ‘average GP’ and the ‘average rural area’, but there is scope to make them more dependent on the type of area and population size,” he said.

The research used data from the Medicine in Australia: Balancing Employment and Life longitudinal survey of doctors. Melbourne Institute Working Paper No. 13/12 can be downloaded from <www.melbourneinstitute.com/miaesr/publications/working-paper-series/>.

Pay for Performance Schemes Can Worsen PerformanceFinancial incentives (pay for performance) schemes for health professionals “can undermine motivation and worsen performance” according to research co-authored by Professor Tony Scott of the Melbourne Institute that was published in the British Medical Journal in August.

Professor Paul Glasziou of Bond University led a team of academics of which Professor Scott was a member. They describe the current evidence on the effectiveness of financial incentives as “modest and inconsistent” and say that, although reward schemes can sometimes improve the quality of clinical practice, they may also be an expensive distraction. Yet such schemes have already been adopted as a key strategy by the National Health Service in the United Kingdom, Medicare in the United States, and many private insurers, based on the tenet that people respond to rewards.

Professor Scott and his colleagues have therefore devised a checklist to assess the potential benefits and harms of pay for performance schemes before they are implemented. “While some commentators and policy makers believe financial incentives can reduce the delay between new evidence and changes to clinical practice, there are many pitfalls,” they write. “The proposed checklist is aimed at guiding implementers of financial incentives past some of these pitfalls.”

For further details see, Glasziou PP, Buchan H, Del Mar C, Doust J, Harris M, Knight R, Scott A, Scott I and Stockwell A, ‘When financial incentives do more good than harm: A checklist’, British Medical Journal, vol. 345:e5047.

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Melbourne Institute NewsViews expressed by the contributors to Melbourne Institute News are not necessarily endorsed or approved by the Melbourne Institute. Neither the Melbourne Institute nor the Editor of Melbourne Institute News accepts any responsibility for the content or accuracy of information contained in this publication. Editor: Rachel Derham tel: (03) 8344 2158, fax: (03) 8344 2111, email: r.derham@unimelb.edu.au. Sub-Editor: Nellie Lentini. Contributors: Eoin Hahessy, Penny Hope, Professor Guay Lim, Dr Cain Polidano, Professor Tony Scott, Ryan Sheales, Associate Professor Roger Wilkins, Professor Ross Williams AM

Recent Melbourne Institute Working Papers12/12 ‘Job Insecurity and Future Labour Market Outcomes’ Seamus McGuinness, Mark Wooden and Markus Hahn13/12 ‘Getting Doctors into the Bush: General Practitioners’ Preferences for Rural Location’ Anthony Scott, Julia Witt,

John Humphreys, Catherine Joyce, Guyonne Kalb, Sung-Hee Jeon and Matthew McGrail14/12 ‘A Second Chance at Education for Early School Leavers’ Cain Polidano, Domenico Tabasso and Yi-Ping Tseng15/12 ‘Healthy Habits: The Connection between Diet, Exercise, and Locus of Control’ Deborah A. Cobb-Clark,

Sonja C. Kassenboehmer and Stefanie Schurer16/12 ‘Explaining the SES School Completion Gap’ Cain Polidano, Barbara Hanel and Hielke Buddelmeyer17/12 ‘Measures of R&D Tax Incentives for OECD Countries’ Russell Thomson18/12 ‘International Linkages of the Korean Economy: The Global Vector Error-Correcting Macroeconometric

Modelling Approach’ Matthew Greenwood-Nimmo, Viet Hoang Nguyen and Yongcheol Shin19/12 ‘The Impact of Paid Maternity Leave on Labour Market Outcomes’ Barbara Hanel20/12 ‘Decomposing Differences in Labour Force Status between Indigenous and Non-Indigenous Australians’

Guyonne Kalb, Trinh Le, Boyd Hunter and Felix Leung

Working Papers can be downloaded for free from <www.melbourneinstitute.com/miaesr/publications/default.html>. If you would like to receive an email notification when new Working Papers become available, contact the Melbourne Institute at <melb-inst@unimelb.edu.au>.

Level 7, Alan Gilbert Building, The University of Melbourne P: +61 3 8344 2100 F: +61 3 8344 2111 www.melbourneinstitute.com

Study Advocates Tough Measures for High School Dropouts

A Melbourne Institute study has backed tough government measures to ‘coerce’ early school leavers back into education. Researchers investigated what happens to teenagers who leave school prematurely and what likelihood there is of them re-engaging in learning. The study, ‘A Second Chance at Education for Early School Leavers’, found the longer a teenager stays away from study, the less likely they are to return. Previous studies have shown children who drop out of school have difficulty finding work, and often accept low-paying jobs.

Lead author Dr Cain Polidano said this bolsters the case for “coercive measures” to make teenagers re-engage in study. “Already the Federal

Government requires some school leavers to return to education before they can claim income support,” he said. “Consideration should be given to broadening the reach of coercive measures to encourage more early school leavers to return to study.”

The researchers questioned the effectiveness of simply lifting the age when teenagers are allowed to leave school, as a means of encouraging further study. “While keeping children in school should be the first priority, the modest improvement in school completion rates since the mid-1990s underlines the importance of also having programs to encourage early school leavers to return to study,” Dr Polidano said.

The study found females were roughly 20 per cent less likely to re-engage in formal education after leaving school, because they are not as willing to undertake vocational training (VET courses). “VET is historically associated with preparing workers for male dominated jobs in agriculture, mining and manufacturing,” Dr Polidano said.

Melbourne Institute Working Paper No. 14/12 can be downloaded from our website, <www.melbourneinstitute.com/miaesr/publications/working-paper-series/>. For more information, contact Dr Cain Polidano: telephone (03) 8344 2102 or email <cainp@unimelb.edu.au>.

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