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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
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