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Beyond AusterityReforming the Greek Economy$
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Costas Meghir, Christopher A. Pissarides, Dimitri Vayanos, and Nikolaos Vettas

Print publication date: 2017

Print ISBN-13: 9780262035835

Published to MIT Press Scholarship Online: May 2018

DOI: 10.7551/mitpress/9780262035835.001.0001

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Education and the Greek Economy1

Education and the Greek Economy1

(p.309) 8 Education and the Greek Economy1
Beyond Austerity

Nikolaos Vettas

The MIT Press

Education affects the Greek economy in two main ways. Expenditure for education services is a significant part of national income, hence, a better design of the education system directly contributes to overall higher efficiency and welfare. Education also contributes toward building 'human capital', a high level of which is a condition for competitiveness without a need to resort to lower wages. Public spending for education tends to be lower than the EU average, however households tend to privately spend significant amounts, especially due to the high value they assign to university education. Overall, the Greek education system is significantly underachieving its potential and its overall performance is mediocre. Lack of appropriate incentives appears to be the cause for many of the failures, as neither education units nor individuals are seriously evaluated and systematically rewarded for their progress. The State exercises excessive control over the entire system, making it too inflexible, formalistic and averse to change and adaptation to new conditions. Before the crisis, and as long as a relatively high number of graduates could find employment in sectors of the economy not exposed to competition (including the public sector), and as long as the State budget could contribute the funds that kept the system functioning, there were no incentives for reform. Education has been hit hard during the crisis: funding has decreased significantly, the institutions and rules have not improved and many high quality people have migrated abroad. However, as public finances and household savings will remain under pressure for the foreseeable future, the reform of the education system in Greece becomes an urgent priority and an important condition for growth.

Keywords:   Greece, education system, university reform, human capital, incentives, evaluation social mobility

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