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• Between 2000 and 2012, the proportion of young adults (25-34 year-olds) with a tertiary qualification has grown by more than 3% per year on average in OECD countries.
• On average across 24 national and sub-national entities participating in the OECD Survey of Adult Skills, 39% of adults have achieved a higher level of education than their parents.
• A 20-34 year-old with tertiary educated parents is 4.5 times more likely to participate in tertiary education than a young adult whose parents did not have a tertiary qualification.

Remittance flows are an important source of financing for developing countries. In addition to the microeconomic impact at the household level, remittances have grown into an important pillar of macroeconomic stability, reducing volatility of external flows, lessening the probability of current account reversals, thus strengthening creditworthiness. By studying 83 developing countries covering the period 1993-2006, we analyse the impact of workers’ remittances on sovereign rating assessment. First, we look at the traditional determinants of sovereign ratings and assess to what extent remittances are taken into account. Second, we build a model for high-remittance receptors to capture the potential effect that remittances may have on Fitch, Moody’s and S&P ratings. Third, we assign ratings to unrated Latin American countries for which remittance flows are generally high. Our conclusion supports the view that credit rating agencies (CRAs) do take remittance flows into account to rate sovereigns. Nevertheless, this variable turns out to be significant for a limited set of countries, small in size and classified in the low and middle income categories. We derive policy implications and recommendations from our findings for boosting rating coverage.

Science project. The very phrase is nearly synonymous with hands-on learning, learning-by-doing, collaboration. Are students more engaged and do they perform better in science if their school encourages them to work on science projects, participate in science fairs, belong to a science-related club or go on science-related field trips – in addition to teaching them the mandatory science curriculum? To find out, PISA 2006 asked school principals about what kinds of extracurricular science activities they offered their students and linked their responses with students’ performance on the PISA science test.

Global allocation of capital and fluctuations in asset prices are increasingly influenced by the activities of Sovereign wealth funds (SWFs). The Santiago Principles called for higher transparency, stressing that SWFs should exhibit clearer governance standards and sound portfolio management principles. Although asset allocation strategies for these funds are not known, SWFs are suspected to follow other factors besides risk-return objectives. This paper attempts to shed light on some of these concerns. The fear that sovereigns with political motivations use their financial power to secure large stakes in Western companies is shown to be unfounded. We find that SWF investment decisions do not differ greatly from those of other wealth managers. We propose to use mutual funds’ investments as a benchmark for SWF investment allocations. We collect data of SWF and mutual fund equity investment at the firm level and analyse these investments on a geographical and sector basis. Moreover, we compare target investments for these two groups by looking at the political regime in the sending and recipient country, under the hypothesis that this variable is not determinant for SWF investments. Finally, we provide a comparison of SWFs and other public funds based on governance features related to investment. We argue that double standards for regulation should be avoided and efforts to achieve higher transparency should be made by all investing actors.

• Privately managed schools tend to attract more advantaged student populations; but the difference between the socio-economic profiles of public and private schools is narrowed when privately managed schools receive higher levels of public funding.
• The difference between the socio-economic profiles of publicly and privately managed schools tends to be twice as large in school systems that use universal vouchers as in systems that use targeted vouchers.

Means-tested Social Assistance (SA) benefits play an important role as social protection floors sup-porting households in financial difficulties. This paper presents evidence on the patterns of SA benefit re-ceipt in a selection of OECD and EU countries. It provides an overview of the role of SA benefits in social protection systems and assesses the generosity of benefit payments. It then studies the dynamics of SA benefit receipt based on micro-level data describing trends in aggregate receipt and transition rates and presenting new evidence on spell durations and repeat spells. The final part of the paper summarizes recent empirical evidence on state dependence (or ‘scarring effects’) in benefit receipt and discusses its possible sources and policy implications.

Increasing international migration and changing immigrant populations in OECD countries make international comparable data on migrant populations essential. These data should be updated regularly to capture a detailed picture of migrant populations. This document presents the first results of the update of the Database on Immigrants in OECD Countries (DIOC) for the years 2005/06. It describes immigrant and emigrant populations by socio-demographic characteristics and labour market outcomes in the OECD, as well as updated “brain drain” figures.

In 2005/06, 10.8% of the population in the OECD was foreign-born, representing 91 million persons. Latin American and African migrant populations increased by more than 30% between 2000 and 2005/06, slightly more than that of Asian migrants (27%). Labour market outcomes of immigrants vary by region and country of origin, but they improved significantly since 2000. In many OECD countries, low-educated foreign-born fare better on the labour market than their native-born counterparts, but high-educated migrants tend to have lower employment rates and higher unemployment rates than their native-born counterparts...

Large cities are generally educational assets: in most countries, performance improves dramatically when only the scores of students in urban areas are considered, although this is not the case in some countries, such as Belgium, Slovenia, the United Kingdom and the United States. When comparing the performance of students in large cities, students in Portugal and Israel perform as well as those in Singapore, and students in Poland perform as well as those in Hong Kong.

House prices have been moving up strongly in real terms since the mid-1990s in the majority of OECD countries, with the ongoing upswing the longest of its kind in the OECD area since the 1970s. If interest rates were to rise significantly, real house prices may be at risk of nearing a peak. The historical record suggests that the subsequent drops in prices in real terms might be large and that the process could be protracted. To quantify the probability that a peak is nearing in the current situation a probit model was estimated for the period 1970-2005 on a restricted set of what are generally agreed to be the main explanatory variables. Aside from interest rates, these include measures of overheating, such as the gap between real house prices and their long-run trend and the rate of change in real house prices in the recent past. The main finding is that an increase in interest rates by about 1 to 2 percentage points would result in probabilities of a peak nearing of 50% or more in the United States, France, Denmark, Ireland, New Zealand, Spain and Sweden.

This report examines market power in rail markets in Europe arising from horizontal and vertical mergers in the sector, and is intended to provide a high-level basis for discussion at the round table itself. It presents factual information on horizontal and vertical merger cases involving rail freight operators, highlighting the processes used by competition authorities to determine the circumstances in which such mergers should be approved. It also provides commentary on the economics of these markets and, hence, the likely prospects for their future shape. The topic of the report is timely. The first set of results are available from a preparatory study for the European Commission on whether policy objectives with respect to moving freight onto rail can best be achieved by giving freight more priority on the rail network.

• On average across OECD countries, students who are highly motivated to learn mathematics because they believe it will help them later on score better in mathematics – by the equivalent of half a year of schooling – than students who are not highly motivated.
• Students’ motivation to learn mathematics is lower in education systems that sort and group students into different schools and/or programmes.

Large shifts in countries’ external current account positions can be disruptive, often reflecting sudden stops in the flows of external finance and leading to exchange rate and banking crises. As a result, an empirical literature has emerged on the sustainability of, and the determinants of large swings in, current account positions. We shed further light on this issue by testing for the presence of unit roots in the current account balance-to-GDP ratios of a large set of mature and emerging-market economies using a methodology that allows for structural breaks in intercepts and trends. We then construct a chronology of current account reversals that is consistent with sustainability of external positions and use it to estimate the factors explaining the likelihood and magnitude of such reversals using a selection model with ordered probit in the first stage. We find that most of the factors that explain the probability of reversals, such as trends in capital flows, in the budget balance and in external positions, also influence their magnitude. But there are a few exceptions. For instance, the stance of monetary policy and the magnitude of external imbalances prior to a reversal seem to be more powerful predictors of the probability of reversals than of their magnitude.

This paper assesses the sustainability of global imbalances by testing for the presence of unit roots in the current account positions (measured in relation to GDP) of the United States, China, Japan, Germany and the oil-exporting countries using a methodology that allows for structural breaks in levels and trends. We find that the external positions of these major countries/regions are stationary around structural breaks, which define episodes of current account reversals. On the basis of an event analysis of past reversals, it appears that structural breaks are associated with shifts in the fiscal stance, exchange rate parities and potential output growth, a finding that underscores the scope for macroeconomic and structural policies to ensure the sustainability of external positions while avoiding potentially disruptive reversals. These findings have implications for long-term capital flows after the crisis.

Educational opportunities have a very important impact on a person’s life. Employment, earnings, well-being, health and trust are all strongly related to education and skills. A lack of high-quality educational opportunities is the most important way in which poverty, social inequality and exclusion are transmitted from one generation to another. For countries to grow and progress in a sustainable way, educational opportunities should be distributed in an inclusive way.

• One in eight students across OECD countries has repeated a grade at least once before the age of 15.
• Many countries reduced the rate of grade repetition between 2003 and 2012.
• One in five disadvantaged 15-year-olds has repeated a grade. Even among students with similar academic performance, the likelihood of repeating a grade is one-and-a-half times greater for disadvantaged students than for advantaged students.

• PISA results show that no country or economy has reached the goal of creating a completely equitable education system, but some are much closer than others.
• Some countries and economies have shown that improvements in equity can be achieved at the same time as improvements in overall performance, and in a relatively short time.

This paper examines the hypothesis that commodity price trends are useful indicators of OECD price developments. After a discussion of statistical techniques to assess the time series properties of individual price indices, integration and cointegration tests are conducted on a wide set of individual and aggregate commodity price indices and consumer price indices for the major seven OECD countries. The results of the analysis suggest that there is no clear evidence of any equilibrium relationship between levels of consumer and commodity prices. But relations between changes in a number of commodity prices such as metals and agricultural raw material prices and consumer prices may be established. The stability over time of such relationships is also tested ...

Information and communication technologies revolutionise not only the speed at which information can be transmitted, but also how information is conveyed and received. Technological innovations have a profound effect on the types of skills that are demanded in today's labour markets and the types of jobs that have the greatest potential for growth. Most of these jobs now require some familiarity with, if not mastery of, navigating through digital material where readers determine the structure of what they read rather than follow the pre-established order of text as presented in a book…