1. Human Capital: Education and Health in Economic Development
Lecture 11
Human Capital: Education and Health in Economic Development

2. 11.1 The Central Roles of Education and Health
Health and education are important objectives of development, as reflected in Amartya Sen’s capability approach, and in the core values of economic development
To raise levels of living(发展目标之一，提高生活水平）, including, in addition to higher incomes, the provision of more jobs, better education, and greater attention to cultural and human values, all of which will serve not only to enhance material wellbeing but also to generate greater individual and national self-esteem（发展的核心价值之一）

3. 11.1 The Central Roles of Education and Health
Functionings：What people do or can do with the commodities of given characteristics that they come to possess or control.
capabilities ：the freedom that a person has in terms of the choice of functionings, given his personal features (conversion of characteristics into functionings) and his command over commodities

4. 11.1 The Central Roles of Education and Health
Health and education are also important components of growth and development – inputs in the aggregate production function
Human Capital ：Productive investments embodied in human persons, including skills, abilities, ideals, health, and locations, often resulting from expenditures on education, on-the-job training programs, and medical care.
Their dual role as both inputs and outputs gives health and education their central importance in economic development.

5. the impact of deprivation in health and education on people’s lives（辍学儿童）

6. the impact of deprivation in health and education on people’s lives（营养不良）

7. Education and Health as Joint Investments for Development
These are investments in the same individual
Greater health capital may improve the returns to investments in education
Health is a factor in school attendance（健康影响入学）
Healthier students learn more effectively
A longer life raises the rate of return to education
Healthier people have lower depreciation of education capital
Greater education capital may improve the returns to investments in health
Public health programs need knowledge learned in school
Basic hygiene and sanitation may be taught in school
Education needed in training of health personnel

8. Improving Health and Education: Why Increasing Incomes Is Not Sufficient
Increases in income often do not lead to substantial increases in investment in children’s education and health。Howarth Bouis found that intake of vitamins A and C is not positively associated with income in the Philippines and argued that consumer education was important.
But better educated mothers tend to have healthier children at any income level
Significant market failures(spillover benefits) in education and health require policy action

9. 11.2 Investing in Education and Health: The Human Capital Approach
Initial investments in health or education lead to a stream of higher future income
The present discounted value of this stream of future income is compared to the costs of the investment
Private returns to education are high, and may be higher than social returns, especially at higher educational levels

10. Age-Earnings Profiles by Level of Education: Venezuela（委内瑞拉）

11. Financial Trade-Offs in the Decision to Continue in School

12. 人力资本（教育）投资的现值
E is income with extra education, N is income without extra education, t is year, i is the discount rate, and the summation is over expected years of working life

13. Sample Rates of Return to Investment in Education by Level of Education, Country, Type, and Region

14. Effect of Education on Wages

15. Share of Hours Worked by Education Level, 1940–2008

16. Ratio of College Wages to High-School Wages(College Premium)

17. Breakdown of the Population by Schooling and Wages

18. Share of Human Capital in Wages in Developing and Advanced Countries

19. How Much of The Variation in Income Across Countries Does Education Explain?

20. 11.3 Child Labor
215 million are classified as “child laborers "in 2008.

21. Child Labor as a Bad Equilibrium

22. child labor policy
1. child labor as an expression of poverty and recommends an emphasis on eliminating poverty rather than directly addressing child labor; the World Bank
2. strategies to get more children into school, including expanded school places, such as new village schools, and conditional cash transfer incentives to induce parents to send their children to school

23. child labor policy
3. child labor inevitable, at least in the short run, stresses measures such as regulating it to prevent abuse and to provide support services for working children 联合国儿童基金会
4. banning child labor.ILO

24. 11.4 The Gender Gap: Discrimination in Education and Health
Young females receive less education than young males in nearly every low and lower-middle income developing country
Closing the educational gender gap is important because:
The social rate of return on women’s education is higher than that of men in developing countries
Education for women increases productivity, lowers fertility
Educated mothers have a multiplier impact on future generations
Education can break the vicious cycle of poverty and inadequate schooling for women

25. Youth Literacy Rate, 2008

26. 11.4 The Gender Gap: Discrimination in Education and Health (cont’d)
Consequences of gender bias in health and education
interlinked nature of Economic incentives and their cultural setting（女儿是赔钱货，受更多教育的女孩嫁不出去。白富美为何都成剩女了？）
“Missing Women” mystery in Asia（根据全国第六次人口普查公报显示：新生男女比例达到108：100。 80后是111：100，未来10年这个比例还将继续扩大，将会有近3000万男人找不到老婆；发达国家该比例约为95:100）
Increase in family income does not always lead to better health and education

27. Female-Male Ratios in Total Population in Selected Communities

28. 剩男剩女等级与年龄构成

29. 11.5 Educational Systems and Development
the amount of education demanded largely determines the supply
四个影响教育需求的主要因素：the wage or income differential, the probability of success in finding modern-sector employment, the direct private costs of education, and the indirect or opportunity costs of education

30. 11.5 Educational Systems and Development
1. The modern-traditional or urban-rural wage gap is of the magnitude of,say, 100% for secondary versus primary school graduates.
2. The rate of increase in modern-sector employment opportunities for primary school dropouts is slower than the rate at which such individuals enter the labor force. The same may be true at the secondary level and even the university level in countries such as India, Mexico, Egypt.
3. Employers, facing an excess of applicants, tend to select by level of education.

31. 11.5 Educational Systems and Development
4. Governments, supported by the political pressure of the educated, tend to bind the going wage to the level of educational attainment of jobholders.
5. School fees decline at the university level as the state bears a larger proportion of the college student’s costs.

32. Private versus Social Benefits and Costs of Education: An Illustration

33. 11.5 Educational Systems and Development
To a large degree, the problem of divergent social versus private benefits and costs has been artificially created by inappropriate public and private policies with regard to wage differentials, educational selectivity, and the pricing of educational services.

34. Educational Systems and Development
Distribution of Education
Lorenz curves for the distribution of education
Education, Inequality, and Poverty

35. Lorenz Curves for Education in India and South Korea

36. Gini Coefficients for Education in 85 Countries

37. Education, Inequality, and Poverty
educational systems of many developing nations sometimes act to increase rather than to decrease income inequalities
positive correlation between level of education and level of lifetime earnings
The private costs of primary education (especially in view of the opportunity cost of a child’s labor to poor families) are higher for poor students than for more affluent students, and the expected benefits of (lower-quality) primary education are lower for poor students.

38. 11.6 Health Measurement and Distribution
measuring health with under-5 child survival rates and life expectancy.
The latter measure has the advantage that it is available for most countries, at least as an estimate

39. Life Expectancy in Various World Regions

40. Life Expectancy versus GDP per Capita

41. How Health Interacts with Income

42. Effect of an Exogenous Shift in Income

43. Health and Income per Capita: Two Views

44. Under-5 Mortality Rates in Various World Regions

45. Deaths of Children under Age 5

46. Children’s Likelihood to Die in Selected Countries

47. Proportion of Under-Five Children Who Are Underweight, by Household Wealth, around 2008

48. Proportion of Children under 5 Who Are Underweight, 1990 and 2005

49. Health, Productivity, and Policy
Is there a connection?
poor health conditions in developing countries also harm the productivity of adults：healthier people earn higher wages
Robert Fogel：stature is a useful index of the health 身高是健康的衡量指标

50. Wages, Education, and Height of Males in Brazil and the United States

51. Health, Productivity, and Policy
Health systems include the components of public health departments, hospitals and clinics, and offices of doctors and paramedics（护理人员）. informal network includes traditional healers, who may use somewhat effective herbal remedies（草药）, or acupuncture（针灸）
some developing countries’ health systems were far more effective than others in achieving health goals（下图）
Health Systems Policy：Great variability in the performance of health systems at each income level(WHO)

52. GNI Per Capita and Life Expectancy at Birth, 2002