2.3 Measurement problems
The costs and benefits described above are not straightforward to measure, particularly when the measurement is required to be consistent across nations. There are a number of possible problems with the measures that are particularly relevant to New Zealand; they are reviewed in Appendix A. Despite the measurement errors, which we quantify to some extent, there are still likely to be fundamental differences between New Zealand and the OECD.
One important point to note is that the OECD's time profile of earnings is drawn from cross-sectional data. That means the earnings of today's graduates when they turn forty are assumed to be equal to the earnings of today's forty-year-olds with tertiary qualifications. Because the current cross-section is the result of the past thirty years of policy, which is unlikely to be similar to current or future policy, it is difficult to draw conclusions about the effect of policy settings from this work. That would require cohort analysis but, even then, the analysis would be inherently backward looking.
