Reviewing the macroeconomic relevance of education system in Ethiopia: the role of skill gap

Abstract

This study examines an in-depth and systematic review of the effect of education on macroeconomic variables in Ethiopia, taking into account the effect of education systems on the skill gap and unemployment of graduates. Education economies in the literature show the effect of education on economic growth, as well as the effects of education on learner skill and knowledge, as well as unemployment and underemployment. The inclusion of human capital in the growth accounting claimed that people with more education typically have high skills and open the gate of employment, which in turn provides higher production capacity and growth. The capacity and skills that students acquire while in school is a critical factor in the school-to-work transition and increasing productivity. Moreover, the education system is vital to determining the capability of learners and economic development. Meanwhile, Ethiopia did not realize the learning promise due to the increasing crisis of learning systems and its effect on educated unemployment. The incidence of skill gaps and unemployment among the educated undermines economic growth, which widens income inequality and poverty. Furthermore, low enrolment in vocational courses, poor method of delivery, low input availability and accessibility, low-skilled teachers, and poor school-industry linkage were the main contributors to the skill gap, resulting in undesirable outcomes for education. In addition, the new educational development roadmap of Ethiopia did not review the relevant parts of the education system. Therefore, the ministry of education should revisit the new educational development roadmap in line with the learning outcome.