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II. The Importance of Educational Attainment

This section investigates the links between educational attainment and indicators of
economic performance. It first discusses the relationship between educational attainment and
labour market outcomes including the unemployment rate, the labour force participation rate and
the employment rate. It then looks at the linkages between education, income and productivity.
Finally, it examines the relationship between education and other measures of well-being such as
poverty, crime, and health

A. Educational Attainment and Labour Market Outcomes

Educational attainment has a strong positive effect on the labour market outcomes of
individuals.2 Persons with more education tend to experience lower unemployment, participate at
a higher rate in the labour force, and thus enjoy higher employment rates. In this sub-section, an
analysis of these three major labour market indicators is provided by educational attainment,
based on data from the Labour Force Survey.

i. Unemployment Rates

Persons with more education run a much lower risk of being unemployed (Chart 1). The
overall rate of unemployment in Canada was 6.3 per cent in 2006, but only 4.0 per cent for
persons holding a bachelor‘s degree. It was slightly lower for those holding a degree above the
bachelor level (3.9 per cent). Persons with post-secondary certificate or diploma also had a
significant labour force advantage, since the unemployment rate was only 5.1 per cent for this
group. There seems to be no advantage in continuing to post-secondary education after high
school if one does not complete: the unemployment rate for persons whose highest level of
educational attainment was some post-secondary education without certificate was 7.3 per cent,
above that for persons with only high school education.

High school graduates without any higher education, perhaps surprisingly, have an
unemployment rate of only 6.2 per cent, compared to 12.3 per cent for persons with some high
school education and 12.5 per cent for those with 0 to 8 years of education.3 The data from the

2 Along with the number of years of formal education one receives, or the certification or degree obtained, the
quality of the education the student receives is also important. Poor quality education not only leads to lower levels
of educational attainment because of students leaving school early, but also prevents students from gaining the skills
they need for a suitable job in the workforce and thus lowers the returns from education. Richard and Vining (2004)
found that as a school performance in standardized test score improves, the students rise academically as an overall
group independent of their socio-economic background. This suggests that increasing the quality of education is
beneficial to all categories of students.

3 Nonetheless, it is important to remember that these rates include all of those who are 15 years old and over, and so
include students that may still be in high school and looking for part-time work, who are classified as unemployed.
The unemployment rate for individuals aged 25 years and over in 2006 was 10.5 and 8.5 per cent respectively for
persons with 0-8 years of schooling and those with some high school education. This is respectively 2.0 and 3.8
percentage points lower than the rates for individuals aged 15 years and over. Comparatively, the unemployment
rate for high school graduates aged 25 and over was only 0.8 percentage point lower (5.4 per cent) than that of
individuals aged 15 years and over. This illustrates the phenomenon underlined in the text. Even though the divide
is not as stark for persons 25 and above as that for the group aged 15 and over, individuals aged 25 years and over



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