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Chapter 8

Chapter 8

Education

Norton Media Library

Dwight H. PerkinsSteven Radelet

David L. Lindauer

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Introduction

• Education is a form of Human Capital

• Economist T.W. Schultz: highlighted the critical role of human capital investment in the form of education for development

• Human capital investment with formal education (in all levels), health services, and on-the-job training

• Schooling provides general HK which is a prerequisite to the specific HK associated with on-the-job-training

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in 1960: 68% of all adults in the developing countries are estimated never to attend school

in 2000: only 37%

note that if economic conditions do not encourage productive economic activity, the demand for educated workers will be weak, and those with schooling may struggle to generate income

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schooling generates an attractive private and social rates of returns

yet, countries tend to underinvest in schooling!

insufficient or misallocated resources

lack of accountability

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Trends and Patterns

• Read first 5 lines :)• Stocks and Flows: Stock is amount of schooling

embodied in a population• Flows: Net change in those flows as a result of

enrollment• Gross enrollment rates have risen in many parts

of the world at various levels• Net enrollment rates are enrollments of those

relevant age

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in high-income countries: gross enrollment rate (in schooling beyond high school) is around 60%

in middle-income countries: 22%

in low-income: 10%

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Schooling versus Education

• There is a gap between rich and poor nations in educational quality

• Learning Outcomes also vary (see figure 8.3)

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The Benefits of Education

• Education is an Investment • Education is a human capital

investment• Internal Rates of Return to Schooling • Estimated Rates of Return

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Education is a “public good”

• Education is a public good with a positive externalities

• The Privates sector or markets will under produce education if left to themselves.

• The fact that Education has a positive externalities justified public provision or subsidy of education.

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Social and Private Rate Returns to Education

• There is a difference between private and social rate of return to education for countries which depends on the level of income