Linking Education Policy to Labor Market Outcomes

Education plays a central role in preparing individuals to enter the labor force, as well as equipping them with the skills to engage in lifelong learning experiences. The objective of this study is to review what is known about the role of education in improving labor market outcomes, with a particular focus on policy considerations for developing countries. The report presents findings from current literature on the topic, which offers new ways of looking at the returns to education, together with evidence from four original data analysis and background studies of education and labor issues in Ghana and Pakistan. Country studies on Ghana and Pakistan are used to substantiate findings of the literature and illustrate the heterogeneity of education labor market linkages across regions. These countries were chosen because they are representative of two of the poorest regions of the world and because their inclusion in the analysis complements ongoing World Bank work on education and labor market issues in those countries. This report offers two types of findings: those relevant to the content of educational policies and those relevant to the framework for educational policy making.