Value of FE Colleges to the Economy

Dr Kristinn Hermannsson, whose research expertise is in Economics, has recently produced a report on the value of education colleges to the economy. 

Research Background

Further Education Colleges serve a large and diverse population of students. They typically grant incremental qualifications based on relatively short courses to a large number of students. Due to this diverse and diffuse nature of the studies their economic contribution is often overlooked, in particular compared to the fewer and more iconic bachelor and master degrees provided by universities. As part of the David Hume Institute's discourse on further education in Scotland, Dr Kristinn Hemannsson and colleagues at the University of Strathclyde, Professor Kim Swales and Dr Patrizio Lecca, set out to quantify the economic impact of the 2011 graduation cohort from FECs based on the value of their increased skills being applied in the labour market.


Drawing on data from the FECs and wider labour market data it is possible to determine the increase in human capital stock available in the labour market attributable to the 2011 FEC cohort. Using the AMOS model of the Scottish Economy (which is maintained by the Fraser of Allander Institute and used for example by the Scottish Government) it was  estimated that once in employment the cohort will boost Scottish GDP by 0.12% annually until their retirement. That is approximately £150m annually. Comparing the funding and output of FECs and HEIs respectively we further argue that the FECs provide as good value for money for taxpayers based on the contribution of their graduates to the labour market. This is without making any allowance for potential differences in ability of these institutions student intake.