Evolution of Interdependencies between Education and the Labor Market in the View of Sustainable Development and Investment in the Educational System

Education represents the basic pillar of preparing individuals for integration into the labor market, but also is a crucial component of ensuring sustainable development. The purpose of this research was to identify the type of influences existing between education and the labor market in EU member countries in the context of different levels of investment in the educational system. Cluster analysis and the ordinary least squared method were used to identify the type of influences between the indicators characterizing the level of education and the labor market between 2000 and 2021. The empirical results showed that there was a significant negative correlation of the educational dropout rate with the level of employee compensation, number of hours worked by each employee, and their labor productivity, in the countries with the poorest level of educational investment. In the countries with significant investments in education, getting a graduate diploma and participating in vocational training programs led to a better compensation of employees and a higher employee productivity while the financial aid given by the state for pupils and students reduced the number of worked hours, brought down unemployment amongst people with primary and secondary education and, last but not least, increased the employment rate for higher education graduates. An average level of educational investment led to negative influences between early-stages and employees' payment level and real labor productivity, while becoming involved in educational activities and participating in vocational training programs increased their rates of remuneration and real productivity. A significant impact of higher education graduates on both increasing unemployment rates and falling employment rates was noticed as has been identified in other studies.