Will two more school years really give Britain the skills it needs?

In 1918, as the nation embraced the important principle of basic schooling for all, a minimum school leaving age of 14 was introduced. Over the next 50 years it was raised to the age of 16. Three decades on, the government proposes raising the minimum school leaving age to 18, in response to the perceived increase in demand for education and skills.

Although a quarter of young people do not continue in full-time further education past the age of 16 today, the government optimistically projects that by 2013 only around one in ten young people will still leave school at age 16. If the law is changed in that year, as proposed, it is this minority of sixteen-year-olds that will be affected by the change in the law.

Although it may affect only a modest number of students, the Bill will disproportionately affect students from disadvantaged backgrounds who are more at risk of dropping out. Therefore, increasing the minimum school leaving age should not only make our workforce more skilled but also reduce inequality in educational achievement and, subsequently, in earnings.

The economic case for raising the school leaving age is strong. The demand for skills continues to grow as a result of technological change and globalisation. Staying on longer in education and training should make individuals more productive, and we know that it certainly increases their earnings.

In fact, economists have used previous increases in the minimum school leaving age to evaluate the gain from a universal and mandatory increase in schooling. The wage gain from an additional year of schooling, particularly for those who would otherwise have dropped out, is substantial: up to 15 per cent.

The social benefits from an increase in the average education level of young people are likely to be even greater, in the form of increased tax revenue, a reduction in welfare costs and other potential non-monetary benefits, such as reduced juvenile crime. Depending on the education and training actually provided to these young people, the costs of providing additional schooling should be more than offset by the benefits.

With any policy, however, effective implementation is crucial. Economic predictions of the value of additional schooling are based on current provision. There will no doubt be transitional problems that may depress the quality of education provision as the system gears up to keeping large numbers of young people in education or training. This is, however, a short-term concern. The bigger question is what skills these young people will gain as a result of their additional years in education.

The specific nature of the education and training accessed by young people will determine the benefits of this law change: patchy, low-quality and time-limited provision will not deliver the benefits we might hope for.

A final concern is the impact on young people and their peers. Despite our ever-changing notions of when adulthood begins, we may be worried about compelling sixteen- and seventeen-year-olds to remain in education. If disengaged and disenchanted teenagers are forced to remain in a system they have rejected, there is no guarantee that they will really improve their skills and there may well be a negative knock-on effect to their peers.

That said, all of these concerns and more were raised when the age was last increased and yet now we regard it as normal that a fifteen-year-old would be in school. So, too, we can imagine a time when we will regard 18 as the normal age someone would contemplate leaving school, bringing us more in line with other countries such as the US.

Anna Vignoles is Deputy Director of the Centre for the Economics of Education and a Reader in the Economics of Education at the Institute of Education.