BOMBACH, G. Manpower Forecasting and Educational Policy

Manpower Forecasting and Educational Policy
Author(s): Gottfried Bombach

Source: Sociology of Education, Vol. 38, No. 5 (Autumn, 1965), pp. 343-374
Published by: American Sociological Association
Stable URL: http://www.jstor.org/stable/2111987
Accessed: 07-12-2017 13:07 UTC
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide
range of content in a trusted digital archive. We use information technology and tools to increase productivity and
facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at
http://about.jstor.org/terms
American Sociological Association is collaborating with JSTOR to digitize, preserve and

extend access to Sociology of Education
This content downloaded from 179.228.153.146 on Thu, 07 Dec 2017 13:07:46 UTC
All use subject to http://about.jstor.org/terms
SOCIOLOGY or EDUCATION
Fall 1965 * Volume 38 8 Number 5
MANPOWER FORECASTING AND EDUCATIONAL POLICY*

Gottfried Bombach
University of Basel
This paper deal8 with methods of ma'npower foree,stiing in relationt to economic growth
with the aim of providing tool8 for educational policy purposes. It is concerned with the
interdependence between the educational 8tructure of manpower as derived from economic
growth and the output of the educational system. The paper advocate8 the idea of man-
power forecasting as an instrument of educational policy and e$plains two of its basic
aspects:
(1) the philosophy behind the concept,
(2) the methods of analysis and forecasting.
I. The Philosophy of Manpower Forecasts
THE QUESTION AS TO whether educational policy needs manpower fore-

casting at all will be examined from two perspectives: the viewpoint of
the society and the viewpoint of the individual.
The Viewpoint of Society
Human resources can be designated in economic terms as a factor of pro-

duction called manpower. The supply of manpower in general is limited,
but this is particularly true with respect to highly qualified personnel.
An-imbalance between the supply of and the demand for human resources
may result from several factors. First, there is the demographic develop-
* This is a revised version of a paper written for the Program on Educational

Investment and Planning of the Organization for Economic Cooperation and Develop-
ment. It refers mainly to problems of the member countries of OEOD which include
22 nations of western Europe, the United States, and Japan.
344 Sociology of Education
ment with its marked waves, influenced for example by this century's
wars, changes in birth-rates, and mass migrations. Second, the pool of
talent cannot be expanded beyond certain limits set by natural condi-
tions. Yet there exist today untapped reserves of talent. This points to
the next limiting factor, namely the capacity of the educational system,
i.e. the number of educational facilities available and their structure in
terms of level. There may also be special bottlenecks such as insufficient
understanding of the crucial role played by education in a country's
economic development and social welfare. A disequilibrium between the
supply of and demand for human resources cannot be overcome in the
short run. Long-term policies are required.
Demand for educational output is bound to increase steadily in the
years to come as a result of economic growth and the requirements of
technical assistance for developing countries. But there is already a
shortage of highly qualified manpower.' Europe has been living off its
educational capital stock acquired decades ago. "Re-investments" and
"net-investments" as well as efforts to attain the occupational structure
necessary for future economic expansion have been largely neglected.
This situation cannot be remedied in the short-run because of the
long gestation period involved in training highly qualified manpower
and the even longer period required by the educational system to turn
out teaching and other personnel to run this system. Assuming that the
"technical coefficients" of the system (such as pupil-teacher ratios, sup-
porting staff-pupil ratios) remain unchanged, and assuming further that
the share of the output of the educational system absorbed by all sectors
of the economy other than the educational sector remains unchanged,
then it takes a whole production period (of teachers and other educa-
tional staff) before the system can expand its output. Of course, remedy
may be temporarily sought by deteriorating the coefficients of the sys-
tem. Or else, temporary relief may be achieved through an increase in
the proportion of the output of the educational system re-absorbed into
the educational sector at the expense of the economic sectors. However,
these partial remedies do not constitute a solution but only a postpone-
ment of the problem.
According to one argument, there can never be such a thing as " over-
education." Educational policy should simply follow the principle of
promoting the maximum education permitted by the resources of the
society. The argument seems all right so far as the general level of edu-
cation is concerned. It is certainly hard to believe that we shall have a
general over-supply of highly skilled labor ten or twenty years hence.
1 Throughout this paper highly qualified manpower is referred to as HQM. In

this context HQM covers not only university graduates but also persons trained at
technical institutes, engineering schools, commercial colleges, etc. i.e. personnel with
training below the university but above the secondary school level.
Manpower Forecasting and Educational Policy 345
We need only think of the exports of skilled labor to developing coun-

tries, a demand which is practically insatiable. Furthermore we have to
bear in mind that in a modern society with its increasing productivity,
working time becomes shorter. Higher standards of general education are
required in order to enable men to spend their increasing leisure time in
a useful way.
However, we are not thinking so much in terms of total requirements
but rather in terms of the right balance, i.e. the structure of manpower
requirements by type of profession or skill. Even though we cannot ima-
gine having general over-education, serious structural disequilibria may
arise, and we have in fact experienced them in the past. When the danger
of "intellectual unemployment" or even the development of an "aca-
demic proletariat" is discussed, what is involved is, to this author's mind,
not so much the risk of a general over-supply of highly educated men, but
rather of a partial over-production. The true purpose of long-run man-
power requirement projections is, therefore, to avoid structural dis-
equilibria, i.e. bottlenecks in one field and gluts in another. Financial
resources for education are limited; expenditure on education has to
compete with other important public outlays, such as defense and infra-
structural investment. There must be some guarantee that the available
funds are put to optimal use. This can only be done by keeping the right
proportions. We must avoid as far as possible an unbalanced educational
investment.
Economists' experience shows that there is a tendency towards wave-
like movements whenever there are time lags in the adjustment of supply
and demand of durable assets. The intensity of the waves i.e. of the
alternating periods of excess supply and excess demand, are directly
proportional to the length of the time lags. Since education is also a dur-
able asset, one can observe a clear tendency towards the formation of
various types of cycles. First, we have the problem of replacement. At
present we find in almost all branches of the economy a rather irregular
age structure. The consequence of these irregularities is the well-known
replacement cycle, known as the echo principle in business-cycle theory.
Another case is that of the cob-web cycle. If in a certain profession de-
mand exceeds supply, salaries will go up. This will induce young men
to enter this particular field. If the education period is long, supply will
not be affected immediately; since salaries will remain high, more and
more may decide in favour of this career even though in a dynamic sense
potential supply already exceeds demand. In the end the situation will
be just the opposite of the initial one; supply will exceed demand and
salaries will be low. One of the main purposes of manpower requirement
projections is to avoid this type of fluctuation which must have an ad-
verse effect on economic development and inflict personal hardships at
the saine time.
The Viewpoint of the Individual
It is an accepted social and democratic principle that the individual

should have free access to education and freedom of choice of career. In
applying this principle, however, the individual encounters several diffi-
culties which can be overcome with the help of manpower forecasting.
First, he is handicapped by a lack of informaton concerning educational
opportunities and the means available to finance his education. Second,
he lacks information on the career prospects likely to prevail by the time
he leaves the educational system. He is inclined to base his career decision
on today's market situation, because his long training period prevents
him from doing any better. Third, the individual is increasingly con-
fronted with contradictory career information, provided largely by pres-
sure groups whose policies do not necessarily conform to the overall
requirements of the economy. These difficulties call for forecasting and the
dissemination of information by an impartial authority responsible for
the entire country, which would provide the individual with the needed
employment market guidance for the distant future.
II. Methods of Forecasting Long-Term Demand

for Qualified Manpower
A. Basic concepts and forecasting period
a) Distinction between "stocks" and "flows": the replacement

problem
A society 's labor force may be conceived of as a stock in the same

way as the stock of real capital, the other factor of production. Long-
run educational policy must be a policy of adjusting the stock to the
requirements. What ought not to be confused is the size of the stock
itself and the change of the stock over time, the latter being a flow.
The labor force continuously increases by the influx of young workers
leaving the education sector and by immigration, and it decreases by
retirement, death and emigration. The change of the stock is equal to
the balance between inflow and outflow.
Adjusting stocks to requirements therefore means finding the right
balance between inflow and outflow. A long-run forecast of demand for
labor as a basis for an efficient educational policy thus involves both the
evaluation of future requirements in terms of stock data and the future
outflow per year. These two sets of data together allow us to derive the
inflow demand (i.e. the output of the education sector plus immigra-
tion) necessary to maintain or restore an equilibrium between supply and
demand for the various types of labor.
In order to avoid any confusion between stocks and flows, the term
requirements is used only in connection with stocks. In any given period
a certain labor force in terms of particular stock data (number of work-
ers, specified by sector, occupation, type, and level of skill) is needed to

correspond with the output of the various industries, the requirements
of the public sector, health services and households, as well as to achieve
certain cultural objectives.
The number of workers needed each year in order to adjust stocks
to requirements is referred to as labor demand (again specified by sector,
occupation, etc.). Thus "requirements" always refer to stocks, and
"demand" to flow data.
Total demand per year for a certain type of labor can be split up
into two components: (1) replacement demand necessary to offset the out-
flow through retirement, death and emigration, and (2) expansion de-
mand needed to adjust the stock to higher levels of activity. Expansion
demand depends both on the growth of the rate of activity and on the
development of productivity. It may turn out to be negative of course.
Negative expansion demand does not necessarily imply a lower level of
activity; it can also be the result of labor productivity growing faster
than output. In this case total demand is smaller than replacement de-
mand and the stock decreases.
It follows that the estimation of total labor demand in a certain
period must logically proceed in two steps. The first step is the assess-
ment of requirements in terms of a stock. As will be shown later this first
step involves several stages.
The second step consists of converting stocks into flows, i.e. deriving
total demand from the change in stocks.
The stock-flow relationships for manpower may be illustrated by a
simple example. For reasons of simplicity a working life of only 5 years
has been assumed; otherwise the table would turn out to be too large.
The main conclusions remain unchanged. In our model 100 workers enter
the labor force each year, the stock being zero at the beginning. The num-
ber of years elapsed since the date of entry into the production process
shall be called the working age. In our example it ends after the fifth
year.
Working Age (Years) Outflow Total

(Retire- Labor
Inflow 1 2 3 4 5 'ment) Force
lst year 100 - - - 100

2nd year 100 100 - - 200
3rd year 100 100 100 - 300
4th year 100 100 100 100 - 400
5th year 100 100 100 100 100 500
6th year 100 100 100 100 100 100 500
7th year 100 100 100 100 100 100 500
It is obvious that after some time an equilibrium is attained. Every

year both inflow and outflow amount to 100 workers. Furthermore the
age distribution in the stock is perfectly regular. What we observe be-
ginning with the fifth year is a regular age distribution corresponding to

a stationary labor force.
Total labor force in this example amounts to 500 workers, the annual
flow (total demand=replacement demand) to 100 workers, i.e. the stock-
flow ratio is 5:1. Let us assume that in the eighth year the total labor
force has to be increased by 10 per cent in order to meet the requirements
of a higher level of activity in the sector in question. This means that
50 additional workers are needed. Total annual demand goes up from 100
to 150 workers, i.e. by 50 per cent.
In reality the working life in the field of highly qualified manpower
is between 30 and 40 years. This results in a much higher stock-flow ratio
and consequently, in a far greater sensitivity. Assuming a working life
of 40 years, a 1 per cent change in stock requirements would lead to a
40 per cent change in annual demand !
The model under discussion corresponds to the "stable population'
model employed in population theory. Of course it does not reflect reality
because of the irregularities always existing in the age structure of the
labor force. Each rate of growth of the labor force has its particular
equilibrium age structure. Only in the marginal case of a stagnant labor
force does the equilibrium age structure yield age cohorts of equal size
(our example). The equilibrium structure of a growing labor force has
a bias towards the younger age, groups; correspondingly the equilibrium
structure of a decreasing labor force has a bias towards the older age
groups.
Information on the equilibrium age structure of various possible
models is particularly useful in order to determine replacement demand.
Calculating replacement demand with a regular age distribution of what-
ever type is mathematically quite simple of course. In the post war
period, however, irregularities in the age structure are the rule rather
than the exception. In periods of seriously distorted age structures one
needs detailed statistical information as regards the age distribution in
various professions. The consequence of the irregularities just described
is the generation of the well-known replacement cycles, referred to as
the "echo principle"' in the context of real capital. After wars, in par-
ticular, replacement cycles may be of such an intensity that replacement
demand completely overshadows expansion demand.
b) Classification problems
So far we have simply been arguing in terms of the total labor
force. As stated in part I global estimates are of little help for an effi-
cient educational policy. We need rather a specification that is as detailed
as possible. The following types of breakdown may be distinguished:
(1) by economic sector

(2) by occupation
(3) by type of education

(4) by level of education
Educational policy is mainly concerned with breakdowns of type

(3) and (4). It will be shown, however, that the sectoral breakdown
and in some respects also the occupational one are intermediate steps
necessary to obtain forecasts which are more than mere extrapolations
and which take due account of the structural changes of the economy.
As regards the occupational breakdown, statistics are poor in prac-
tically all countries. It is therefore advisable to leave this classification
entirely aside even though this means giving up detailed analysis of cer-
tain important substitution processes, such as the present substitution of
lawyers for economists in a number of jobs. Ignoring the occupational
breakdown we are left with a three-way classification of manpower re-
quirements by sector and branch of economy, level of education and field
of study.
Present-day experience shows that there is a rather high degree of
substitution possible between manpower enjoying university level edu-
cation and higher secondary education. It is difficult to determine whether
this observed substitution is only the consequence of the extreme scarcity
prevalent on the market or whether the two levels of qualification are
actually considered more or less equivalent. In the following discussion
HQM, subdivided by field of study, is treated as a homogeneous group.
One must, however, be aware of the problems involved since educational
curricula differ considerably.
Another substitution problem is that of mobility between different
professions, which will generally be small as far as HQM is concerned;
as a rule, a doctor cannot become a lawyer, a lawyer not a theologian
and a theologian not an engineer.
Finally we are left with the mobilit.y between sectors within a cer-
tain profession. In a good number of cases this type of mobility is rather
high; i.e. engineers with the same basic training can operate in quite
different industries, and the same applies to administrators, economists,
lawyers, etc.
In general one can say that the higher the elasticity of substitution,
the less the necessity for a refined breakdown in forecasts and the less
the danger of creating structural disequilibria. On the other hand, fore-
casts containing no breakdown whatsoever and dealing simply with
national aggregates of HQM are no basis for an effective educational
policy since they are based on the unrealistic assumption that perfect
substitution is possible between professions.
c) Individual demand versus manpower requirements
The two main types of projections of the development of the edu-

cational system which may be distinguished are:
(1) the individual demand approach

(sometimes referred to as the method of forecasting "supply"
or simply the "push" method);
(2) the manpower requirements approach
(sometimes referred to as the method of forecasting "demand"
or simply the "pull" method).
Following type (1), the potential supply of educated manpower is

derived from the present and the expected future individual demand
for education. The projection is based on the rate of growth and the age
composition of population, the present structure of the educational sys-
tem, the number of students already enrolled, the prevailing graduation
rates and trends, and the possible changes in the social structure of in-
flow into education.
Type (2) projections start with the future requirements for edu-
cated manpower as derived from the expected future level of national
wealth and the future structure of the economy (and society). They try
to show what development the educational system has to follow in order
to meet future requirements.
Type (1) projections start with the present structure; they are
forecasts in the proper sense of the word. Type (2) projections, on the
other hand, move in the opposite direction: the starting point is the
expected educational needs at a far distant point of time, say in 1985,
and by means of a decisions model it is shown what the desired develop-
ment of the system would look like; the "projection" runs backwards.
The confrontation of demand and supply of educated manpower shows
structural disequilibria, i.e. surpluses and shortages which have to be
expected in the future.
As regards the forecasting period, a distinction is usually made
between short-term, medium-term, and long-term forecasts. The mutual
adaptation of manpower requirements and supply to each other in the
short and medium run is not usually within the scope of educational
policy in its proper sense. That kind of adjustment requires other poli-
cies and measures, such as changes in average working time, promotion
of mobility between professions through retraining and by removing
institutional and traditional barriers, and finally through migration,
which constitutes the most promising factor for some countries at pres-
ent.
Thus the essence of this paper is a discussion of techniques used
for making long-term, forecasts of demand (or requirements) for quali-
fied labor. Nevertheless, some of the facts and interrelationships de-
scribed in the following paragraphs are of some relevance to supply
forecasts as well. Short and medium-term forecasts of qualified man-
power supply can be fairly solidly grounded once detailed statistics of
university students (broken down by subject and taking into account
age structure) and of secondary school enrolments are available. In this
JNTER;MEDIAT2 OUTPUT"
, . .8 .gi-gg.-i gg-.gE. g-g-. . . . . . . . . . . . . . . . . . . . . . . . . .QU.. .NH

4~~~~_ H~~~~IGH-LY QUALITf IPD
... .... i:"FIN g iAL OTPUT5"

. ; u ............ ...a ... .............
Annucat WdsvpouL".. An.. UQ1 /WnNEd r * Annd... .
PLOW CLI4AQT Leqondc: I- Pt4niary educaACor

7rSEcand4ry sduccatQrL
- HL(3-&r CCcatLLor
case the projection of supply is more a statement of facts than a forecast

in its true sense, which as a rule, involves a prediction of future deci-
swons.
The total "output" of the system at each level consists of those
who do not continue in school to the next higher level. It may be divided
into two parts: "final output" which goes into the labor force and "in-
termediate output" which is reabsorbed by the educational system in
order to staff itself. Thus the total output of the secondary schools is
divided into " intermediate output " which is reabsorbed to staff the
primary schools and "final output" which enters the labor force. Simi-
larly, the total output of higher education is divided into "intermediate
output" which staffTs the primary, secondary and higher schools and
"final output" which goes into the labor force. If we assume for illustra-
tive purposes 4 years spent in primary school, 8 years in secondary
school, and 6 years in university, the whole "production period" of a
scientist amounts to 18 years, which must be regarded as a minimum. Of
course, the planning period need not be so long as that. Primary school
may be entirely excluded in this context since in the developed countries
everybody undergoes primary education.2 But even when leaving sec-
ondary school, flexibility is almost perfect except for certain special types
of secondary schools such as commercial schools. Thus the higher educa-
tion planning period is shortened to something like 8 or 10 years.
However this is only true for a period of rather steady developmrent.
In view of the current strain on the educational system, the outlook is
20 Of ourse an important problem for educational policy is the supply of the

right number of primary-school teachers, requirements being mainly determined by
demographic factors.
quite different. As illustrated in the portion of the graph representing

the "total output" of the system (output to be understood as the total
number of students who have passed the final examination), the flows
back into the system in the form of primary and secondary school teach-
ers, university teachers, assistants in university institutes, research
workers, etc. must be considered as "intermediate output" in the sense
of an input-output table.
Now if a sudden and continuing increase is to take place in what
has been named "final output," an expansion of university capacity
and secondary school capacity is necessary.3 This expansion implies a
larger flow of "intermediate output," i.e. students absorbed by the edu-
cational sector itself in order to meet the increased demand for "final
output." It is because of this circular flow indicated by the scattered
lines in our graph that the production period in an expansionary phase
is much longer than it would appear at first glance.
The effect of this inevitable "detour in production" is to be observed
in a number of countries. Final demand is rising and in order to adjust
the educational system to rising demand, part of this educational output
is absorbed to increase educational capacity. Thus we are confronted
with the paradoxical situation that just because of an increased demand
for university-traied men, supply might actually be reduced for a
lengthy period; a larger proportion is needed internally to feed the
system. Yet the expanding educational system has to compete with the
ever-increasing requirements from outside the system. Such a situation
is clear evidence of insufficient educational planning in the past.
For the considerations in the following paragraphs it is useful
to conceive the educational sector as an input-output system in a more
formal sense. Methods will be described to predict "final demand" for
HQM. However as already explained above, the total output of the
system must be far above this level, particularly in periods of rapid
expansion. Final demand has to be made to correspond to a total output
sufficient to meet both the requirements of the educational system
itself and of "outside" demand. Thus we can state that the educational
sector has an internal multiplier, which relates final demand to total
output (i.e. intermediate plus final demand).
The precise estimation of this multiplier implies a thorough study
of the structure of a country's educational system, which will normally
be carried out in connection with short and medium-term supply pro-
jections. The main determinants of such transformation multipliers will
be described below.
3In many countries the proportion of secondary school graduates going to uni-
versities is already so high that any expansion of university training is inevitably
accompanied by a roughly proportional expansion of secondary-school capacity. Thus
at a time of rapid growth of requirements for education manpower, the planning
period must be extended to 14 years for this reason alone!
B. Projections of Gross National Product and Manpower Requirements
a) Optimal combination of projection methods
In economics a large number of prediction methods and techniques

have been developed which are partly in competition with one another.
It is useless to search foir an ideal method. What one needs to find is an
optimal combination of feasible methods. In particular there may be a
combination of methods based on broad aggregative statistics on the one
hand and making use of sample surveys and expert field studies on the
other.
An appropriate disaggregation of the manpower requirements to
be predicted is a precondition for a combination of techniques. Disag-
gregation may be done in a variety of ways; for the following discussion
three main types of breakdown may be distinguished:
(1) according to economic sector

(2) according to type of education
(3) according to level of education
In addition to this we need a
(4) "functional" breakdown
by replacement demand on the one hand and expansion demand arising

mainly from a growing population and increasing wealth on the other.
Furthermore, for certain purposes a breakdown of labor require-
ments by geographical areas might prove desirable. This will be particu-
larly the case when the regional mobility of labor is small, which in
certain professions may be a consequence of extreme federalism in a
country, the existence of several official languages, etc. Plans for the
development of backward areas within a country also call for a regional
specification of requirements.
We have to start with functional disaggregation, i.e. the distinction
between replacement demand and expansion demand. In this section
replacement demand is left out entirely. It will be considered when the
conversion of total requirements into annual needs is discussed in Sec-
tion C.
The main concern of the present section is a long-run forecast of
labor requirements ("stocks"), specified by type and level of education.
As will be set out later, the sectoral breakdown is an unavoidable detour.
b) Growth of population, labor force and GNP

The main determinants of a society 's requirements for educated
manpower in a certain period are the size of population, its age struc-
ture, and the society's standard of living, which we usually measure by
real income per capita. Therefore, what we basically need for the assess-
ment of future requirements is a demographic forecast (population
growth and changes in age structure) and an estimate of the expected

average rate of growth of the real product.
Apart from classical economic doctrine we have heretofore consid-
ered population growth as an autonomous variable, i.e. as independent
of changes in the community's wealth. An estimate of population growth
was made independently from which a labor force estimate was derived
on the basis of assumptions regarding future participating quotas (i.e.
share of the economically active population in total population, this
share being determined by the age composition, the participation of
female population in the production process, the length of military
service, etc.). And finally GNP projections were based on the expected
development of the labor force by applying labor productivity trends.
This has sometimes been referred to as the "naive method" of long-term
economic forecasting.
There are several serious objections to be raised against the "naive
method." The feasibility of the projection of productivity trends will
be discussed later. For the moment a fundamental dilemma of forecast-
ing is of concern to us; the question as to which development ought to
be considered "autonomous" or to state it in other terms, which varia-
ble ought to be taken as the "independent" and which variable as the
"dependent" one?
The unexpected postwar demographic development in a number of
countries suggests that even in highly developed societies population
growth is not unaffected by living conditions. However, we still know
very little about the laws governing the interaction between population
growth and the growth of the real product; but it is almost certain that
it will be impossible to discover any stable relationship. Thus we are left
with only one alternative, namely, the traditional way of regarding the
demographie development as an autonomous process, migration of course
being excluded in this context.
Things are quite different so far as labor force as distinct from
total population is concerned. Here one really runs the danger of get-
ting into a vicious circle, this being the very crux of the naive method.
As set out above, one starts with a forecast of the increase of the
total labor force and the historical trend of labor productivity. The
assumption is that the future average productivity increase will be the
same as in the past, and it is on this assumption the rate of growth of
the real product is based.
The problem now is that from the rate of growth of GNP so esti-
mated, no matter with what refinements, manpower requirements are
derived. This, however, means that we try to extract something which
has been introduced before.
Another objection to the use of historical productivity trends springs
from an objective of educational policy which is to increase productivity
more rapidly than in the past.
Thus the forecaster's dilemma is a chicken-egg problem of the fol-

lowing type: should the projection of economic growth be put first and
be used as a basis for the assessment of manpower requirements via
estimated productivity trends, or should the anticipation of manpower
trends be made first and then economic growth derived via productivity
trends?
This problem is not only a technical but also a substantive one. It is
strikingly illustrated by the following dilemma: has the growth rate in
Germany (F.R.) over the last years been so high because of the labor
inflow through migration, or has the labor inflow on the contrary been
attracted by the pull of growth?
In principle a simultaneous determination of economic development
and manpower requirements would be the only satisfactory solution.
Current discussion shows, however, that basically very little is known
as to which factors really determine economic growth. As soon as one
establishes a series of forecasts based on alternative growth rates one
realises that a difference of half a per cent in GNP growth does not have
very much influence. The demographic development, structural changes
in the economy, and in particular the substitution processes within firms,
i.e. the increasing share of HQM in the total labor force are far more
important.
Assuming that a modern society is able to avoid periods of serious
unemployment and insufficient use of productive capacity, a minimum
GNP growth rate of some two or three per cent is guaranteed through
the process of capital-deepening. Growth rates cannot be allowed to fall
below such a minimum level simply for political reasons. Growth con-
sciousness in the post-war period has led a growth rate of 2 or 3 per cent
(which corresponds to the secular trend in former periods) to be re-
garded as stagnation.
A second estimate should be based on what one believes to be the
maximum possible rate of growth. For some European countries which
experienced extraordinarily high rates of growth in the past, the upper
limit will depend mainly on the degree to which they are able or willing
to expand the labor force further through migration, on the extent to
which they succeed in increasing the labor force via higher participation
rates 4 and on the extent to which they speed up productivity growth
by providing for labor mobility from less to more productive branches.
At present a sizeable number of serious barriers obstructing productiv-
ity-inereasing factor movements can be observed both within and be-
4 In this context the increase of productivity within the educational system

achieved by way of rationalization (concentration of curricula, i.e. shortening of edu-
cational period etc.) is of importance for a number of countries. Attention has been
drawn to this in the recent "Machlup-plan"; see Fritz Machlup, The Production
and Distribution of Knowledge in the United States, Princeton University Press, 1962,
especially pages 134-144.
tween countries. Thus, future growth will depend to a great extent on

how much individual countries succeed in breaking down these barriers.
A third estimate should be based on the GNP growth rate lying
between the minimum and maximum rates and considered to be the
most likely one.
Target Variables Versus Instrument Variables
In economics a distinction is made between prediction models and deei-

sion models. It appears useful to make this distinction in the field of
educational planning too.
For our present discussion let us distinguish between three types
of variables: (1) autonomous variables, (2) target variables, and (3)
instrument variables.
A certain magnitude has to be considered an instrument variable if
the authority interested in the projection is both able and willing to
influence the development of that particular magnitude. Both are neces-
sary: the intention and the ability to exercise influence.
Autonomous variables, on the other hand, are those which are beyond
the scope of the authority which wants a prediction of future develop-
ment. A variable may be autonomous per se or it may have to be treated
as autonomous because of a given legal or institutional order. As au-
tonomous pier se variables in the field of education, we have in mind
principally demographic factors; a certain natural distribution of hu-
man abilities, if such exists, would also belong here.
As regards the target variables one thinks immediately of economic
targets. A desired rate of GNP growth was mentioned above; it may
be accompanied by structural targets and regional development ob-
jectives. In addition to this, a society may adopt certain cultural targets,
as reflected in what is sometimes referred to as "education as consump-
tion per se." A target can be modified when it proves impossible to at-
tain, and this may come about precisely as a result of manpower
requirement projections as discussed in this paper.
Let us assume that it is the Government that has, asked for a predic-
tion. It is obvious that such a prediction can only be carried out if the
intentions of the Government as regards the use of instrument variables
are known beforehand. The Government, on the other hand, wants to
know the results of the projection as a basis for its decisions; i.e. an-
other famous vicious circle of prediction.
A number of examples are well-known. According to the fashion
of the time a country wants to follow a certain economic growth policy.
In order to have some criterion it commissions a private institute to
forecast the probable average rate of growth of real product during the
next decade. However, it is the Government itself-consciously or not-
which determines this rate of growth in manifold ways, through fiscal
policy, monetary policy, etc. What really happens is that the Govern-
ment wants to have its own future growth policy predicted in order to
base its decisions on the results of this forecast.
Analogies in the field of education are obvious; a government wants
to know to what extent the number of students will increase in order to
adopt a certain policy, whereas it is this government itself which mainly
determines the increase of the number of students through its educa-
tional policy and in particular through its university financing and
scholarship systems.
When forecasting one always has to make assumptions regarding
the development of autonomous factors. Sometimes this is done ad hoc;
sometimes information is drawn from outside.
If there is uncertainty about the development of the autonomous
components, alternate projections should be made. The way this is usu-
ally done is to give minimum and maximum estimates with an inter-
mediate estimate which is considered the most probable one.
What we have in mind is a rather simple type of decision model
which does not produce an unequivocal solution, but rather a wide range
for political decision-making. It is then up to the politician to choose
whichever solution is the optimal one in his opinion.
For predicting requirements for HQM an idea -as to the fututre de-
velopment of an economy 's structure, is more important than exact
knowledge of the overall rate of growth, and in the author's opinion it
is much easier to make reliable statements as regards future structural
trends than to succeed in the difficult and controversial job of precisely
predicting long-run average growth rates.
For the projection of demographic trends we are now equipped with
much better instruments than we were some decades ago. Nevertheless
experience shows that a fairly precise forecast of population growth is
as difficult as economic forecasting.
What has been said in connection with the prediction of economic
development holds true also for demographic trends; for the estimation
of qualified manpower requirements the knowledge of future changes in
population structure is at least as important as an idea of future growth
rates. It is evident that a population with a bias in favor of the lower
age groups has quite different requirements (rapid expansion of pri-
mary schools, secondary schools, universities) from a population which
shows a pyramid with a small base.
c) Manpower requirements derived from population growth and eco-

nomic development
Main Components of Demand
Under A, b) various types of disaggregation of total requirements have

been mentioned. We now focus our attention on the sectoral breakdown
which is indispensable in order to obtain aggregates homogeneous enough

for making projections.
Three main components of requirements for highly qualified man-
power may be distinguished each of which technically requires a com-
pletely different treatment:
(1) requirements of the economic sector;

(2) requirements of the public sector (the educational system not
included);
(3) requirements of private households (direct and indirect de-
mand).
The Public Sector
Public sector requirements are mainly under government control, i.e.

they have to be considered as "instrument variables." Only a precise
statement concerning the central and local authorities' further plans will
enable the forecaster to do more than apply questionable mechanistic
devices, such as relying on some sort of regular expansion in line with
A. Wagner's "Law of increasing public expenditure." Caution must
be exercised with this type of structural projection: there always has to
be a ceiling, i.e. there has to come a break in the structural trends,
otherwise the time would come when 100 per cent of the labor force
is employed in public administration.
The Economic Sector
The problem of an optimal breakdown of the economic sector into a num-

ber of sub-sectors deserves careful consideration. Let us start with two
opposite positions as to the degree of disaggregation. At one end, we
can take the economic sector as a whole without any distinction as be-
tween branches. In this case prediction would be rather simple. The
expected productivity trend together with the estimated growth rate
would produce total manpower requirements. In a second stage a pre-
diction of the structural trends would have to follow, carried out by one
of the methods described below.
There is no need to discuss whether this procedure would give re-
liable results or not. Our main objection is that such results are far too
imprecise to be used as the basis for an educational policy. The indica-
tion as to the approximate number of qualified persons with university
training that we shall need would not help very much. Even if the
total number is correct, there remains the serious risk of a structural
disequilibrium.
Starting from the other end would involve an input-output analysis
with its very far-reaching breakdown of economic activity, which in the
case of some tables may distinguish as many as 50 industries or even
more. The input-output type of breakdown appears to be much too re-

fined for our purpose. A good number of sectors using different pro-
duction techniques but manpower of the same type and of similar
composition may be aggregated.
An ideal type of disaggregation seems to lie somewhere between
the two extremes outlined above. It is, of course, impossible to indicate
with precision the number of sectors constituting an optimal degree of
disaggregation. This figure would certainly be well above three and far
below the number of industries distinguished in a large input-output
table. This brings us to a figure somewhere within the range of 10 to
20. The number varies of course with the size of the country, its struc-
ture, the particular questions in mind, and in particular with the avail-
able statistical information.
As stated in another context, a sectoral breakdown of whatever type
is only helpful to improve our projections insofar as we have some idea
of the future structural development of the economy. If one simply as-
sumes a constant structure over time because of a lack of information,
a direct method of prediction would result in precisely the same trend.
Once sectoral growth rates have been obtained, the next logical step
is to estimate changes of labor productivity so as to derive the total man-
power increment necessary to achieve this growth of real output in the
various sub-sectors.
Today intensive investigations are being carried out in various
countries on a theoretical as well as on an empirical plane with regard
to the determinants of labor productivity. What we have in mind is the
development of macroeconomic production functions and their statistical
testing.
The traditional approach was to treat labor productivity as being
mainly determined by the amount of real capital employed per working
place: the more capital, the higher the productivity.
More recent research has shown quite a different result. Regardless
of the particular method used or the country to which it has been ap-
plied, the outcome has always been that there are factors other than
real capital that determine the rate of productivity increase. It has not
been possible to identify these factors in detail, and they have therefore
been lumped together into a catch-all group of some sort (the trend
component in the production function) ; the name generally used though
not quite correct is technical progress. Other terms such as the human
factor and the organizational factor appear to be more appropriate.
- A number of empirical studies concerned with the impact of the
"third factor" on economic growth have been undertaken during the
last few years. It is striking that the existence of the "human factor"
is so highly important both for the forecasting problem and for educa-
tional policy, since it is just this component which reveals the impact
of educatioln on growth in the most obvious way.
The existence of the "human factor" and its quantitative impor-

tance explains why expenditure on education has to be treated as an
investment expenditure; like expenditure on real capital, it is a key
factor in the endeavor to increase an economy 's productivity and
thereby real income per capita.
Thus an economy is always confronted with an optimization prob-
lem. Assuming that it has decided to spend a certain proportion of na-
tional income on investment, a further decision must be made on how to
allocate this investment expenditure, optimally as between education and
real capital so as to obtain a maximum piroductivity increase. It appears
that formerly the effect of real asset investment on economic growth was
over-estimated as compared with education. Doubtless, the marginal re-
turn of a dollar spent by the society on education is considerably higher
at present than that of a dollar spent on real capital.
Our next topic is the derivation of total manpower requirements
from the output growth of the various sub-sectors. The question has been
raised whether aggregate production functions of the Cobb-Douglas-
type might be helpful in this context. Perhaps such conjecture is pre-
mature. In any case one should not completely forget cruder methods
which have often proved useful. Reference is here made in particular
to the correlation between a sector's output growth and the correspond-
ing productivity growth, a relationship which was first discovered by
Verdoorn.
Now the last step of the multi-stage projection procedure of re-
quirements is to be discussed, namely the analysis of the substitution
process, i.e. an evaluation of the structural trends of manpower within
the sectors distinguished.
One important advantage of disaggregation becomes immediately
apparent. This far from simple projection of structural trends can be
carried out sector by sector, always by using whatever method is most
appropriate in the particular case. It is obvious that there are marked
differences between sectors both in the initial structural position and in
future structural trends.
This can be well illustrated by two very different hypotheses on
possible structural trends. The first holds that because of automation
and the use of ever more complicated machinery the requirements as
regards skill are increasing. This would imply something like a linear
growth of skill. The opposite view contends that on the one hand skill
requirements decrease, since in the age of automation it becomes simpler
to operate a machine, while on the other hand an automated factory
needs a large staff of highly qualified engineers and management per-
sonnel for programming, planning and administration. Plotted on a
graph where the horizontal axis measures the degree of skill and the ver-
tical axis the number of persons required in a certain skill, this second
hypothesis would produce a U-shaped curve.
Both hypotheses may be right, depending on which sector one has

in mind.
It is for this analysis of structure that we need a synthesis of macro-
economic techniques and field studies or sample surveys. For European
countries the skill structure in corresponding U.S. industries may give
a good indication as to the direction in which the development will run.
Another approach would be an analysis of various firms of a certain
sector, ranking them from the least to the most advanced ones. The as-
sumption is that through competition the less advanced firms will sooner
or later be forced to adjust to the advanced ones. In this context due at-
tention must be paid to the formation of the Common Market.
Finally, one can try to calculate correlations between productivity
trends and changes in employment structure.
Private Households
The third component of total requirements distinguished previously

was requirements of private households. It is suggested to distinguish
two quite different types of household demand. Primarily there is a large
and ever increasing number of educated intellectuals like doctors, legal
advisers, artists etc., who offer their services to households and who have
to be produced by the educational system. It is advisable to include the
entire health service here, regardless of the special system a country has
adopted. Requirements of this type may be expressed in terms of stock,
i.e. the number of doctors, lawyers etc. Let us refer to this component
as indirect household demand; households need certain services, and
this annual demand for services has to be translated into corresponding
stock requirements. The demands on the educational system are finally
derived from changes in these stocks.
Besides these requirements we have to consider what has been called
education ias consumption per se. In a society with a continuously in-
creasing material wealth and with more and more leisure time, people
want to become better educated regardless of the type of job they later
decide on. This refers both to secondary and university education.
One can also argue that human beings have to be better educated
in order to be able to spend their leisure time properly. Recent empirical
studies indicate that there is a close correlation between the level of
education and consumption patterns. The higher the educational level,
the more will superior goods (housing, property, health services, etc.)
be in demand. This implies further opportunities for economic growth.
Thus, the threat of secular stagnation may be overcome through steadily
rising educational levels.
In our model education as consumption per se is treated as direct
household demand because an assessment of future demand development
is possible without the detour of an estimate of stock requirements,
which is our present concern. For this reason direct demand may be
momentarily put aside to be dealt with in Section C below.
As regards indirect household demand the first step must be: the
assessment of future requirements in terms of stocks. Otherwise it would
be impossible to take due account of replacement demand as one of the
main components of total demand.
The projection of the type of requirements in question offers com-
paratively little scope for the application of traditional forecasting tools.
If the attempt is made to do more than to use short-cut methods like
trend extrapolations and simple regression analyses, careful studies of
individual professions carried out in close contact with experts are neces-
sary. It might often prove advisable to separate this task entirely from
the projection of the requirements of the economic sector and to leave it
to expert teams.
For each aggregate a minimum 'functional" disaggregation of the
incremental requirements consists of:
(1) incremental requirements due to an increasing population and/

or changing age structures,
(2) incremental requirements due to increasing real income,
(3) incremental requirements due to scientific progress.
A changing pattern in the policy of income redistribution also has

to be taken into account. In general the second and third component
will be closely interrelated. Here the health services offer enough exam-
ples; in fact, it is the most important item deserving careful investiga-
tion.
The advances in the pure sciences and their application to diagnos-
tic, therapeutic and prophylactic measures in the entire field of medi-
cine will inevitably lead to a further increase of personnel at all levels
(both in hospitals and in general practice). Besides involving an increase
in absolute terms this will substantially increase the ratio of qualified
personnel per patient. Such a highly desirable increase in this density
figure is only possible if enough money is available. Therefore the de-
velopment of the density figures is dependent on the increase in general
wealth, and a sound growth of the real product in its turn promotes
scientific progress.
The density figures referred to above are of course key parameters
for any type of projection. Since they are dependent on government ac-
tion to a large extent, all relevant government plans must be known
to the forecaster. Medical service is again the best and most important
example. Through the structure of the social security system the gov-
ernment decisively influences the number of patients and hospital beds
per doctor.
C. Transformation of requirements into annual demand for qualified

manpower
a) Replacement demand
In II, A) a distinction between expansion demand and replacement

was made. Replacement demand is that part of total annual demand
necessary to fill the gaps caused by retirement, death, and emigration.
For the time being at least international movements can be neglected for
the type of labor dealt with here. After further progress towards Euro-
pean unification, a different situation will certainly arise. As regards the
gaps caused by death one can rely on certain regularities to be taken
from life tables. Hence the main component which needs careful investi-
gation is retirement.5 In a stationary society replacement would be the
only demand, and the main prerequisite for its prediction would be relia-
able statistics on the age structure of the various professions. There
would be no need for the application of typical forecasting devices, and
the results obtained from age group statistics would leave only a slight
degree of uncertainty.
The assessment of replacement demand is rather easy as long as the
past development of requirements was steady and no irregularities in
the age structure of the various professions are to be observed due to
such other causes as sharp business fluctuations, sudden changes in birth
rates or wars.
The time pattern of replacement demand in cases of fairly regular
development of past requirements and in the absence of irregularities of
the age structure can be developed with the aid of models explained in
II, A).
In the postwar period irregularities in the age structure of man-
power in the various sectors and professions are the rule rather than the
exception. For this reason reliable statistics on the age composition of
highly educated manpower, specified by profession, are indispensable. In
a number of countries the statistical apparatus in this field is still in the
stage of development. As a result, in discussions on surpluses or deficits
in certain branches the argumentation runs entirely in terms of the total
number of persons of working age regardless of their position in the age
pyramid. This, however, never provides a dynamic insight into the real
market situation. Because of the bias towards the upper age groups as a
consequence of the war, a current surplus in a certain profession may
turn into a serious deficit a few years hence.
5 Our assumption of replacement demand being equal to the retirement ratio is

incorrect in one respect; the mobility between sectors and professions within the
country is not taken into account. In some cases this mobility is certainly not negligi-
ble. One has to think of the present situation where the private sector is able to offer
much more attractive conditions as compared with the public sector.
b) The "transformation multiplier"
When discussing the requirements of the public sector the educa-

tional system has been entirely excluded. The reason was that the re-
quirements of the educational system are to be treated as "derived
demand". Thus the causal chain runs as follows: the activity of the eco-
nomic and public sectors, excluding the educational sector, together with
household demand, determine: total educated manpower requirements in
terms of stock data. From changes in stocks, annual demand is derived
by taking due account of replacement demand. Leaving aside migration
this demand should be equal to the output of the educational system in
an equilibrium position. This output in its turn determines the required
capacity of the educational sector, i.e. the number of school teachers, uni-
versity professors, the size of the research staff, etc.6 Hence the person-
nel of the entire educational system becomes a "higher order capital
good" as it were.
A rough outline of the structure of the educational sector was given.
It has been said before that the examination of the internal structure of
the educational sector and its changes over time is a task quite different
from forecasting final demand for HQM and requires the application
of quite different techniques.
The following are the main determinants of our transformation
multiplier which in practice, of course, is a set of multipliers:
(1) the length of the education period at secondary and university

levels,
(2) pupil-teacher ratios in secondary schools and corresponding
figures for university level institutions.
(3) the so-called "drop-out" rate, i.e. the number of students leav-
ing school or university before having passed the final examina-
tion.
All three determinants are to be conceived not as constants but

rather as strategic parameters of an educational policy. It has to be real-
ized, however, that the possibilities of carrying out an effective educa-
tional policy (i.e. the proper adjustment of supply to the needs) by way
of manipulation of the three parameters are rather limited in the long
run. They are mainly instruments suited to adjust the educational sys-
tem to sudden short-run fluctuations of final demand for HQM.
One example may illustrate why the manipulation of these param-
eters is well suited and advisable for short-run adjustments but rather
dangerous as an instrument of long-run educational policy. Let us assume
that a country has experienced an increase in the rate of population
6 This paper only deals with problems of personnel. The assessment of costs other
than personnel expenditure (expansion and replacement of buildings, apparatus, study
aids) is not, our concern.
growth which persists for a number of years, with a subsequent down-

ward movement to the initial "normal" level. As a consequence-with a
certain time lag-additional teachers will be needed in primary and
secondary schools. Because of the operation of the acceleration process,
demand for school teachers (seen as the annual "production" flow and
not in terms of stock requirements) will increase much more than in
proportion to the expansion of population if the old pupil-teacher ratios
are maintained.
The acceleration principle, however, works in the downward direc-
tion too. If the population boom is over one would after a certain time
observe a sudden drop in requirements for teachers. Disregarding the
possibility of interoccupational mobility, the only way by which the stock
of teachers can be adjusted to the reduced requirements (with unchanged
pupil-teacher ratios) is through retirement. In practice, however, the
rate of retirement will be much too low for achieving the necessary ad-
justment within a reasonable time. The result will be an over-capacity of
the educational system, as happened with the stock of real capital during
the depression phase of business cycles.
This shows that the changing of pupil-teacher ratios may be a very
useful instrument to meet short-term and medium-term fluctuations in
the fundamental variables determining requirements, so as to avoid a
prolonged over-capacity or under-capacity of the educational system.
As regards long-term instruments, an increase in the pupil-teacher ratio
is a measure as inefficient as it is dangerous. To meet real long-term
changes in requirements due to such factors as a persisting increase in
the rate of growth of population, a more rapid expansion of production,
or a faster rate of scientific progress, higher class sizes would help only
temporarily. Thereafter the government would certainly be constrained
to bring the educational sector into line with increasing requirements,
and the final result would be a less efficient educational system because
of excessive pupil-teacher ratios.
In a country experiencing a steady increase in real per capita income,
people want to obtain a better education regardless of whether their
envisaged career requires it (education as "consumption per se"). There
is no doubt that the demonstration effect plays an important role here.
There are difficulties which make inclusion in the estimates of a sep-
arate item labelled "education as consumption per se" extremely diffi-
cult. First, it is next to impossible to make a clear distinction between
vocational training on the one hand and education not linked to future
professional activity on the other.
The second problem is that private demand for education depends
not only on increasing disposable income, but is also determined to a
large extent by government decisions: rules of selection for admission
to secondary school or university, payment of or exemption from school
fees, student scholarships, etc. If a government wants to have educational
requirements predicted without

the use of these important "instrument variables", we have one more
very clear example of a government wishing to have its own future edu-
cational policy predicted from outside.
Therefore, if a separate item "education as private consumption"
is to be included, one has to know whether the government has adopted
specific cultural targets. The task then is not forecasting, properly speak-
ing, but rather translating these targets into requirements.
There is no problem as regards primary education. Universal pri-
mary education is taken for granted in developed countries. The share
of population enrolled in secondary schools still varies substantially as
between different developed countries, so that a country may well follow
a policy designed to increase this share in order to keep pace with neigh-
boring countries.
For the time being any ideas that secondary education is a "luxury
good" are not of great relevance. In many countries the share of second-
ary school graduates going on to the university is surprisingly high. In
Germany, for example, it amounts to some 80 per cent. Therefore a rapid
expansion of secondary education is a precondition for the necessary
expansion of university-level education. It is evident that long-run edu-
cational policy cannot merely consist of increasing this share; this would
only help in a transitional period of extreme scarcity. Furthermore, the
share should never exceed a certain limit so as to maintain high univer-
sity-level educational standards by the process of selection.
Once the educational system has reached a state of balanced growth
(i.e. growth consonant with requirements), each country will have to
make a decision as to whether it wishes to expand secondary education
beyond the degree necessary to feed university level education (paying
due account to the drop-out rates). As pointed out above, such decisions
are based on both the government 's cultural targets and on the wishes
of private households.
The structural approach has the decided advantage over direct
trend extrapolations in that it takes due account of population cycles
which have such an enormous effect on the school population.
We are left with the problem of cultural targets as regards uni-
versity-level education. In contrast with secondary education, which
provides basic and general knowledge and where the over-education
argument is not at all convincing,7 unspecified targets concerning uni-
versity level education are of doubtful value. With very few exceptions
university-level training is linked to certain careers. To produce an ever-
increasing number of doctors, lawyers, engineers etc. far in excess of
7In principle it is very similar to the argument used against the endeavor to
eliminate illiteracy in the early days of industrialization. At that time it was believed
that once someone had been instructed how to read and write, he would never agree
to accept a job at a machine.
society's needs with the somewhat vague aim to attain "higher cultural
standards" would be a waste of resources accompanied by other disad-
vantages. Thus, in the field of university-level education we would need
very specific targets.8
III. Summary and Cronclusions
A. The concept of balanced growth

Expenditure on education has to be conceived of as investment ex-
penditure regardless of whether it is treated as such in national account-
ing systems. There are certain similarities between investment in human
capital and infra-structural investment, namely:
(1) Long planning and gestation periods are characteristic for both
types of investment. Long gestation periods call for genuine
long-term policy-making, so as to avoid a sequence of extended
shortage and surplus periods.
(2) In both cases the capital stock has a long lifetime, a man's work-
ing period amounting to some thirty or forty years. Both for
infra-structural projects and for human capital the stock is
large as compared with annual inflows and outflows. As a con-
sequence of high stock-flow ratios it is difficult to, adjust stocks
properly to requirements at all times. Theoretically speaking the
systems have a high degree of sensitivity to changes in require-
ments.
(3) Investment, both in human capital and in the infra-structure are
among the main determinants of, and preconditions for, future
economic growth. Whereas the impact of real capital formation
on growth has been exaggerated in the past, attempts are cur-
rently being made to measure the productivity effect of invest-
ment in human capital, referred to as the "third factor."
(4) Both sectors are partly or even entirely excluded from the
market economy. For this reason we cannot expect the price
mechanism to solve the problems and to relieve us from plan-
ning and forecasting. The well-known problem of social costs
and social benefits arises.
In addition to what has been said under (3) one more-and for our
present purpose very important-similarity is to be mentioned. Even
though there is a close connection between an economy's capacity to grow
and investment in human capital and the infra-structure in the long run,
there is no rigid interrelationship between the rate of growth of real
product and the two types of investment in the short run. Both types of
investment may be postponed without any adverse effect on economic
growth in the short or even the medium runs. The long run result will
8 In the U.S. this statement would apply only to the upper levels of college and
university education where professional specialization begins.
of course either be a reduction of society's prospects for enjoyment of

increasing wealth or the creation of a large backlog of unsatisfied demand.
This paper attempted to show that because of the rather compli-
cated structure of the educational system and the existence of long lags,
an efficient forecasting system and a well-equipped statistical apparatus
are necessary in order to produce the basic information indispensable
both for a public policy aimed at balanced development and for the indi-
vidual when choosing a career.
One can deny the usefulness of the concept of an equilibrium de-
velopment. One can argue that both because of the difficulties of long-
term projections and the short-sightedness of the authorities responsible
for educational policy, all will remain as it ever was: a bundle of short-
term measures just suited to plug the most serious gaps. This would
mean utter resignation.
Another policy is often suggested, however, which also appears to
make predictions less urgent. This policy simply consists of producing
as much education as possible since general "overproduction" is impos-
sible. Famous examples are adduced such as the one where an over-supply
of chemists in Germany caused a new type of investigation to be started,
thus bringing about important inventions.
One can certainly agree that there is no danger of a general over-
education. Our argument, however, was that "maximum education" is
too vague a concept. The result would inevitably be serious structural
disequilibria with all its awkward consequences.
As to the idea of devising a new laissez-faire type of educational
policy relying more on the regulative forces of the market, the workings
of the price mechanism and the introduction of some sort of profit prin-
ciple into the whole educational sector (M. Friedman, J. Jewkes), some
more or less utopian plans have been under discussion; sometimes it is
argued that for an individual education is an investment and should
therefore be financed accordingly, i.e. by way of credit.
One might be inclined to conclude that through "denationalization"
of the educational system under which the full cost incidence is shifted
to the individual, causing the social costs in the field largely to disappear,
the market forces would do the job, obviating any need for forecasts of
educated manpower requirements. The dispensation from forecasting
and education policy-making sometimes ranks among the main arguments
in favor of the more liberal concept.
In our opinion, this conclusion is wrong. We are not concerned with
the question as to whether market forces could be a substitute for
educational policy. It is certain, however, that even under such a
"self-regulating" system, there would be a strong demand for long-run
projections of requirements both from individuals and from public
authorities. Proper forecasting might be eveii more urgent under such
a system.
For an individual it is impossible to have dynamic insight into the

market structure. The only alternative for him will be to assume that
the market situation upon completion of his education will be, by and
large, the same as when he starts. As pointed out in another context, the
consequence will be the emergence of serious "cob-web cycles," i.e.
periods of over-supply and low salaries followed by periods of shortage
and high salaries.
It is obvious that this type of cycle in education is a much more seri-
ous problem than similar phenomena on the commodity markets. Even
if one decides to introduce the price mechanism into the field of educa-
tion, educated men cannot be treated like a commodity. They cannot be
stored in times of surplus in order to have reserves for future shortages,
assuming that such shortages will actually come about.
For public authorities, the planning period is even longer. School
and university buildings with all the necessary educational and scientific
equipment are very durable assets. As in private enterpise which serves
as the model for the liberal conception, long-term investment requires
long-run demand forecasts, so as to avoid shortages or surpluses. In addi-
tion, the government has to provide the right number of teachers.
Under a laissez-faire system, the forecaster may perhaps have to bear
an even greater burden of responsibility than under any other circum-
stances. Within a framework of a comprehensive educational policy based
on specific targets, and in which the executive authorities are equipped
with sufficient power, an official forecast can always be proved "right",
since the government has the control over the decisive instrument vari-
ables. In a free-market educational system, on the other hand, the fore-
caster is encumbered with a much larger number of "unknowns", and
a wrong prediction will result in serious disequilibria.
In the preceding paragraph, the argument of the self-fulfilment of
a forecast was mentioned. Sometimes, this has been put forth as a general
argument against any kind of forecasting. In education, however, neither
this idea of a long-run forecast of requirements as such nor its quality
can be judged according to whether it proves right at the end or not.
Nor is self-fulfilment, if it comes about, a real argument against attempts
to forecast. Self-fulfilment may be the very purpose. If a society has
certain economic and cultural targets and if the projection of man-
power requirements includes a translation of these targets into needs,
then self-fulfillment is exactly what society wants to happen, regardless
of whether it is brought about by a strong planning policy with direct
controls or by way of a "planification indicative".
B. Structural approach versus short-cut methods

The framework for forecasting educated manpower requirements
recommended in this paper might appear too complicated. It comprises
typical econometric methods used in economic forecasting, an investiga-
tion of all government plans bearing on future requirements, and a study

of the educational sector and its structural trends.
One might question, in particular, whether it is advisable to make
the detour via total manpower requirements which do not directly inter-
est us here. It might be asked whether short-cut methods, mainly
(1) simple trend extrapolations (global or with a sectoral break-

down) either of absolute figures or of quotas,
(2) linking requirements for highly educated manpower directly to
aggregates like national income, total production, etc. by using
regression analysis techniques
are not as efficient and less costly of money and time.

To put it briefly, our opinion is not that these methods, which allow
for a good many refinements, ought not to be tried. In some countries,
not much more can be done at present for want of information. In these
cases, the use of short-cut methods is better than nothing. Experience,
however, shows that they are not sufficient. As soon as better tools are
available, the shorter methods should only be used for purpose of cross-
checking.
We may review once more how the multi-stage projection procedure
recommended here operates.
The basic series to be projected are population and total manpower.
The crucial point thereafter is how to anticipate the future rate of growth
of the real product. The difficulties involved have been discussed above.
If a country adopts a growth target, this implies that with given man-
power (i.e. migration excluded) the growth target amounts to a produc-
tivity target. Without such exogenously supplied targets, one has to
predict the development of global productivity. As explained before, in
principle one has to solve a system of simultaneous equations which one
attempts to do by way of iteration.
The next step is a structural analysis. Growth rates of the various
sectors of the economy have to be projected.9 Together with an estimate
of productivity development (sector by sector) total manpower require-
ments are ascertained.
What has to follow logically is an analysis of structural changes of
manpower within the various sectors: the process of substitution of
higher educated for less educated manpower has to be investigated, and
due account paid to the problem of mobility between various professions.
This is the step where field studies are indispensable.
TThe projection of total manpower requirements together with the
9Without the existence of a global growth target, one can start with expected
sectoral growth rates directly, of course; later on, they are aggregated to the global
growth rates.
substitution analysis determines future requirements of HQM in terms

of stocks.
The next step is the conversion of stock into annual demand data.
Annual demand consists of replacement demand plus expansion demand.
The assessment of replacement demand requires a thorough study of the
age structure in the various professions.
Leaving aside migration, expansion and replacement demand should
be equal to the output of the educational system. At this stage, one has
to include demand for qualified manpower from outside the economic
sector, i.e. public and private household demand. This demand is largely
autonomous in the sense that it is only very loosely linked to the devel-
opment of the real product. However, a part of household demand may
be more closely linked with the GNP.
The required output of the educational system determines the inter-
nal structure of the system. One can define how the various stages of this
system have to develop consistently in order to meet the requirements
of the growing economy; the desired expansion of the universities, the
required expansion of the secondary schools arising therefrom, and
finally the number of teachers the system has to produce to feed back
into itself.
Independently of this assessment of requirements, a projection of
potential supply should be made and should be based on the present
structure of the system, the number of students already enrolled, the
prevailing graduation rates and trends, and the possible changes in the
social structure of inflow into education.
The confrontation of demand for HQM with the supply to be ex-
pected extrapolating present trends will show disequilibria, i.e. sur-
pluses and shortages which have to be expected in the future. It is
impossible to overcome shortages by a corresponding expansion of sup-
ply in the short run because of the long gestation periods.
At this stage, the model can be used as a decision rather than as a
pure forecasting model to show how the disequilibria can be removed by
a policy affecting the decisive structural parameters, both on the supply
and the demand side (e.g. changes in the pupil-teacher ratios, pupil-
classroom ratios, measures to reduce drop-outs, increase of mobility be-
tween professions, international mobility of qualified labor).
The multi-stage projection method recommended here involves sev-
eral steps in all to arrive at final demand, while taking into account the
impact on the internal structure of the educational system. The direct
method reduces this procedure to one single step, i.e. a direct linking
of qualified manpower with GNP. Highly restrictive assumptions are
implicit in this type of short-cut method, the main one being that future
structural trends will be exactly the same as in the reference period,
which is more or less artificially chosen.
The "detour" method recommended here is the only one which al-
lows us to judge whether the results are reasonable or not, i.e. whether
they add up to consistent totals. As stated earlier, short cut methods can
easily produce absurd results like a 100 per cent engineer economy, etc.
Furthermore, our argument maintained that the global method can-
not function as the sole basis for an effective educational policy-even if
the results are fairly appropriate-because of its lack of structural data.
For the reasons given, we do not believe that reliability will suffer
as the result of a higher degree of disaggregation. We are rather con-
vinced that a reasonable degree of disaggregation will increase the
reliability.
The most appropriate degree of disaggregation is obviously deter-
mined by the availability of statistics and the present, as well as the
future efficiency of the national statistical apparatus, by the number and
kind of political instruments available to the decision-making bodies, by
the degree of detail envisaged for the final results of the forecasts, and
last but not least, by the technical aids available to the forecasting unit.
The latter refers to punch-card systems and computers as well as free
access to statistical resources, such as base material collected by central
statistical institutes. However, in making a forecast, one must bear in
mind the time schedule, which must assure that the forecasts are not
out-dated and valueless for the policy-maker by the time they are com-
pleted.
Professor Tinbergen has shown that a forecasting scheme such as
the one described in this paper can be expressed by a system of equa-
tions.10 Models of this type are apparently easy to handle as long as all
the equations are linear and a period of regular development is described.
Systems of this type may be compared with "stable population" models
10 H. Correa, J. Tinbergen, "Quantitative Adaptation of Education to Acceler-

ated Growth," Kyklos, Vol. XV, Ease. 4, 776-786.
J.Tinbergen, "Quantitative Adaptation of Education to Accelerated Growth," in:
Planning Education for Economic and Social Development, H. S. Parnes (editor),
OECD, Paris, 1963, 159-165.
J. Tinbergen, Education Planning Manual, UNESCO, Chapters 4 (The Educational

System as a Basic Service or as an Infrastructure), 5 (The Demand for Qualified
Manpower), 6 (Education as a Supplier of Qualified Manpower), 8 (Comparison of
Plans with Actual Developments, Measures, Revisions; Appendices); January 1963
(mimeographed draft).
J. Tinbergen, "A Planning Model of Education Requirements of Economic Develop-

ment," The Residual Factor and Eco oTnic Growth, OECD, Paris, 1964, 147-169.
See also comments by T. Balogh, G. Bombach, and Amartya K. Sen, 170-197.
J. Tinbergen, L. Emmerij, J. Blum, G. Williams, "Planning Models of Educational
Requirements for Economie Development," paper presented at the OECD Train-
ing Course for Human Resource Specialists, held in September, 1963, in Athens
(mimeographed).
in population theory or with "Golden Age" models in modern economic

growth theory.
These models are very useful in so far as they show that each indi-
vidual growth rate is linked to a particular structure both of manpower
and of the educational system. The applicability for forecasting prob-
lems is rather limited, however, for we are very far from any type of
"Golden Age" development, because of the serious disturbances of the
wars and because of a continuous change of fundamental parameters.
On the whole, it appears that the flexibility of econometric models of
this type is too small to be useful for the purposes we have in mind.1
C. Institutional requirements
The task of integrating educational and economic policy while tak-

ing due account of the social and cultural aims of educational policy
requires institutional arrangements not provided within the present
structure of educational administration in many countries. Although each
country will have its own administrative set-up and political structure,
some general lines can be indicated along which an educational planning
institution could work.
The functions of such a planning or forecasting unit could be de-
scribed as follows:
(1) the collection and standardization of the necessary statistics ac-

cording to the data collecting model as it can be derived from
this paper; 12
(2) the analysis of all the relevant data and the making of forecasts;
(3) the feed-back of all forthcoming data and information and the
consequent adjustment of the forecasts; and
(4) the continuous distribution of all relevant material produced by
the unit.
It would be the task of such an institution to produce the necessary

factual background for political discussion and to furnish the arguments
and alternatives to be used in the analysis of competing demands during
the course of debates on the public budget. Second, the forecasts should
be made accessible for professional guidance purposes and find a wide
distribution amongst all those leaving school and the university.
The internal structure of the planning unit should be shaped accord-
ing to the interdisciplinary character of educational planning. The as-
signment of supply forecasts and demand analysis to different groups
11 For further comments, see G. Bombach, loc. cit.

12 Additional practical help is given by J. Tinbergen in UNESCO Education
Planning Manmual, Examples of Tables to be Used for Educational Planning " (mimeo-
graphed draft).
could be an advantage. Quantitative and qualitative aspects might also be

treated separately. Finally, it is recommended by this author that no
rigid five- or ten-year plans should be envisaged, but rather a flexible
revolving forecasting system over a long period of time. In the process
of work, new techniques and methods should be developed. Thus, a con-
tinuous improvement of the whole planning procedure and its results
might be obtained.

BOMBACH, G. Manpower Forecasting and Educational Policy

Enviado por

Dados do documento

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

BOMBACH, G. Manpower Forecasting and Educational Policy

Enviado por

Direitos autorais:

Formatos disponíveis

Manpower Forecasting and Educational Policy

Author(s): Gottfried Bombach

American Sociological Association is collaborating with JSTOR to digitize, preserve and

MANPOWER FORECASTING AND EDUCATIONAL POLICY*

I. The Philosophy of Manpower Forecasts

THE QUESTION AS TO whether educational policy needs manpower fore-

The Viewpoint of Society

Human resources can be designated in economic terms as a factor of pro-

* This is a revised version of a paper written for the Program on Educational

1 Throughout this paper highly qualified manpower is referred to as HQM. In

We need only think of the exports of skilled labor to developing coun-

The Viewpoint of the Individual

It is an accepted social and democratic principle that the individual

II. Methods of Forecasting Long-Term Demand

A. Basic concepts and forecasting period

a) Distinction between "stocks" and "flows": the replacement

A society 's labor force may be conceived of as a stock in the same

ers, specified by sector, occupation, type, and level of skill) is needed to

Working Age (Years) Outflow Total

lst year 100 - - - 100

It is obvious that after some time an equilibrium is attained. Every

ginning with the fifth year is a regular age distribution corresponding to

(1) by economic sector

(3) by type of education

Educational policy is mainly concerned with breakdowns of type

c) Individual demand versus manpower requirements

The two main types of projections of the development of the edu-

(1) the individual demand approach

Following type (1), the potential supply of educated manpower is

, . .8 .gi-gg.-i gg-.gE. g-g-. . . . . . . . . . . . . . . . . . . . . . . . . .QU.. .NH

... .... i:"FIN g iAL OTPUT5"

Annucat WdsvpouL".. An.. UQ1 /WnNEd r * Annd... .

PLOW CLI4AQT Leqondc: I- Pt4niary educaACor

case the projection of supply is more a statement of facts than a forecast

20 Of ourse an important problem for educational policy is the supply of the

quite different. As illustrated in the portion of the graph representing

B. Projections of Gross National Product and Manpower Requirements

a) Optimal combination of projection methods

In economics a large number of prediction methods and techniques

(1) according to economic sector

In addition to this we need a

(4) "functional" breakdown

by replacement demand on the one hand and expansion demand arising

b) Growth of population, labor force and GNP

growth and changes in age structure) and an estimate of the expected

Thus the forecaster's dilemma is a chicken-egg problem of the fol-

4 In this context the increase of productivity within the educational system

tween countries. Thus, future growth will depend to a great extent on

Target Variables Versus Instrument Variables

In economics a distinction is made between prediction models and deei-

c) Manpower requirements derived from population growth and eco-

Main Components of Demand

Under A, b) various types of disaggregation of total requirements have

which is indispensable in order to obtain aggregates homogeneous enough

(1) requirements of the economic sector;

The Public Sector

Public sector requirements are mainly under government control, i.e.

The Economic Sector

The problem of an optimal breakdown of the economic sector into a num-

more. The input-output type of breakdown appears to be much too re-

The existence of the "human factor" and its quantitative impor-

Both hypotheses may be right, depending on which sector one has

The third component of total requirements distinguished previously

(1) incremental requirements due to an increasing population and/