A Microsimulation Approach for Modelling the Future Human Capital of EU28 Member Countries

In knowledge-based economies, human capital is a major determinant of labor force participation and productivity and has received growing interest from researchers and policy makers alike. Recently, the Wittgenstein Centre for Demography and Global Human Capital (WiC) performed macro-level projections by age, sex and education for all countries in the world. Projections of education in this model are computed based on past trends at the macro level by cohort and sex. This working paper uses data from five waves of the European Social Survey and ordered logistic regressions to estimate the impact of additional dimensions on educational attainment in EU28 countries. Variables included in the model are cohort year, sex, religion, language, immigration status and education of the mother. Cohort analysis allowed us to estimate educational trends net of individual characteristics. Analysis showed that the most important determinant of educational attainment was the education of the mother, but that other ethno-cultural factors such as religion and language spoken at home also played a role. Cohort trends net of individual characteristics varied significantly from country to country, with many countries having low or even null improvement in educational attainment for recent cohorts, most notably in Eastern Europe. The parameters derived from this analysis are used as inputs to a European microsimulation model including several dimensions beyond age, sex and education, many of which will be used to assess future immigrant integration in Europe. Preliminary results from the projections show that net and gross trends yield similar results in many countries where net trends are still dominant, but significant differences emerge in other countries in which net trends are low or null. The microsimulation model also allows for a better appreciation of dynamics in population sub-groups, for instance in rising concerns about potentially growing inequalities, notably for Muslims.