News Releases

Aug 30, 2017

Latin America and the Caribbean faces critical skills gap, IDB study finds

· Despite spending more than 5% of GDP on education and skills programs, region lags many peer nations

· Government actions key to forming workforce capable of dealing with future challenges

MEXICO CITY, Mexico - Despite well-intentioned efforts, many government programs fail to provide Latin American and Caribbean children and adults with the skills they need to thrive, the Inter-American Development Bank’s 2017 flagship study finds. On the other hand, a shift towards evidence-based policies could provide the region with a much-needed skills windfall that boosts productivity and economic growth.

While the region spends on average about the same percentage of GDP on education and skills development as more developed nations, the results fall well short. The average Latin American and Caribbean student is more than one year behind what is expected based on the region’s level of economic development. Only 30 percent of children in third and fourth grade in Latin America and the Caribbean meet the minimum benchmark for math proficiency, compared to 66 percent for nations with similar levels of development and 93 percent in developed nations.

Learning Better: Public Policy for Skills Development takes a critical look at government efforts to improve skills acquisition from birth to adulthood. The study identifies certain programs that are more effective and often cheaper than others. More successful programs include those that improve the quality of interactions at home and at school, provide incentives for young people to stay in school, and help businesses foster a learning environment in the workplace, among others.

“A person who has had access to good stimulation in the early years, good quality schools, university and employment in a formal firm has a big leg up on life,” said IDB Vice-President for Sectors and Knowledge, Santiago Levy. “Governments can do a much better job at improving the lives of those that have had none of those advantages. It is a big challenge but with a big pay-off in terms of growth and equity if we get it right.”

Website with effective skills programs

To help policymakers identify successful evidence-based skills programs, the IDB launched the novel SkillsBank website (www.iadb.org/skillsbank) to review and systematize the evidence on how to promote skills at different stages of the life cycle. It presents evidence on programs that have been effective in promoting skills development in childhood and adolescence in a very accessible format for policy makers.

      

Skills development in the region is not only low when compared to the rest of the world, but unequal within countries. In the early years, children from low income families are exposed to fewer words and more negative feedback than their wealthier peers. Parenting programs have been shown to help the most in closing this gap and they tend to be cheap: gaps in cognitive skills can be cut in half at a cost of about $600 per child-year.

The region spends about $80 billion a year on primary education but only 13 rigorous evaluations have been implemented to see if the programs work. Reducing class size from 25 to 20 students can boost yearly learning by 15 percent, and extending the school day from 4 to 7 hours by 10 percent, but both programs are expensive, increasing spending by about 20 and 60%, respectively. On the other hand, programs that provide lesson plans to teachers and motivate students directly are both effective in promoting skills development and cheap.

During adolescence, programs that offer incentives to keep kids in school are effective. Overall, each year of additional schooling translates into wages that are 9.6 percent higher (the returns for each year of higher education are 16.6 percent).

Hiring teachers competitively and providing incentives to improve pedagogical practices also offer promising results. Carefully designed interventions can also promote the development of socioemotional skills among youth, reducing risky behaviors and setting up young people for greater workplace success.

In higher education, the book urges governments to balance access and quality. For those who cannot attend college, apprenticeship programs have been shown to work well.

For adults, the key is ensuring as many workers as possible have access to larger firms that operate in the formal sector of the economy. These firms provide more work training and salary growth that is three times higher than for workers in smaller, often informal, firms. Apprenticeship and initiatives to train young people with skills that are in demand are effective ways to help disadvantaged youths access jobs in globally competitive firms.

About the IDB

The Inter-American Development Bank's mission is to improve lives. Founded in 1959, the IDB is one of the main sources of long-term financing for the economic, social and institutional development of Latin America and the Caribbean. The IDB also conducts state-of-the-art research projects and provides policy advice, technical assistance and training to public and private clients throughout the region.

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