The Role of Education in the Economy The Role of Education in the Economy, Attachment 1

The Role of Education in the Economy, Attachment 1 Capital Human Capital Schooling Training course Expenditures in medical care Lecture on virtues of punctuality and honesty Bank Account Shares of Stock Assembly line Steel plant See first two paragraphs of “Human Capital” article by Gary Becker: http://www.econlib.org/library/Enc/HumanCapital.html The Role of Education in the Economy, Attachment 1

Education is an investment in human capital Virtuous Circle Human capital is essential to the creation of wealth. Human capital is more important than natural resources in wealth creation. Increases in human capital = more educated workers= more skills/creativity/pride= more productivity. Investment benefits society through the production of goods and services. Virtuous Circle: More education= more wealth created= more funds available for investment. All over the world, educational achievement and economic success are clearly linked. Education expenditures benefit both the individual and society. Investment in human capital Wealth The Role of Education in the Economy, Attachment 1

The Role of Education in the Economy, Attachment 1 Public Sector Human Capital Private Sector Education Education is produced in the public sector via government (taxation) as well as in the private sector (private individuals, companies and churches sponsor many schools as well) Allocating economic resources to education is one of the primary responsibilities of local, state and federal lawmakers. The Role of Education in the Economy, Attachment 1

The most important producer of human capital in the U.S. is…. The Public Education System The U.S. spends more per pupil on education than any other wealthy country. Education requires resources to provide for the needs of students: teachers, administrators, facilities, equipment, supplies, property. The Role of Education in the Economy, Attachment 1

Education is the greatest contributor to economic productivity. The Role of Education in the Economy, Attachment 1

The Role of Education in the Economy, Attachment 1 Electrician Mortgage lender Carpenter Plumber As a student graduates and moves into the world of work, no physical capital is evident from the educational experiences. However, the investment in human capital will be used to provide valuable goods and services that come from earning a living. Human capital is bundled with goods and services provided in the market. For example, in a house, embedded in the rooms and conveniences is the educational attainment of the architect, mortgage lender, carpenter, plumber, electrician and others. The production of the house can’t be separated from the human capital it took to build it. Architect The Role of Education in the Economy, Attachment 1

The Role of Education in the Economy, Attachment 1 Generally, the more education a person has, the more income s/he will have. More income usually means that person pays more income and property taxes. Thus more resources are available for government provided goods and services (like education). Basic reading, writing and math skills benefit all of society. A more educated society benefits our democracy in terms of having a more participatory citizenry. The cost of educator salaries quickly find their way back into the private economy as educators spend their salaries. College graduates are more likely to have children who also graduate college, creating a family education cycle. Society benefits from scientific inventions, business organizations benefit from higher skilled and motivated workers. The Role of Education in the Economy, Attachment 1