1. Life Impact | The University of Adelaide University of Papua New Guinea Economic Development Lecture 9: Education

2. University of Papua New Guinea Slide 1 Lecture 9: Education Michael Cornish Overview Introduction Why increasing income is not enough… Measuring returns to human capital Child labour –Case Study: Cocoa and the Ivory Coast Women’s education Demand, supply, and issues…

3. University of Papua New Guinea Slide 2 Lecture 9: Education Michael Cornish Introduction Human capital: –Any human capacities that raise the productivity of labour –Health, education, managerial/entrepreneurial skill Education: development tool or objective?

4. University of Papua New Guinea Slide 3 Lecture 9: Education Michael Cornish Introduction Education as an enabler 1970: world literacy rate at 63% 2009: world literacy rate at 82% 2/3 of the world’s illiterate are women Average number of years schooling: –Western world: at least 12 years –Sub-Saharan Africa: 4 years

5. University of Papua New Guinea Slide 4 Lecture 9: Education Michael Cornish Why increasing income is not enough… Income / education: causality runs in both directions Simultaneous focus? Spillover effects –Endogenous growth model; K ̄

6. University of Papua New Guinea Slide 5 Lecture 9: Education Michael Cornish Measuring returns to human capital Upfront cost, yearly return Direct costs: tuition fees, textbooks, transportation costs Indirect costs: opportunity cost Σ E t – N t / (1 + i) t [E = education-induced income; N = non-education induced income; i = interest (return); t = time period (year); Σ = summed over work life]

7. University of Papua New Guinea Slide 6 Lecture 9: Education Michael Cornish Data from Venezuela, 1989...

8. University of Papua New Guinea Slide 7 Lecture 9: Education Michael Cornish To continue education or not to continue education...

9. University of Papua New Guinea Slide 8 Lecture 9: Education Michael Cornish Rates of return to investment in education

10. University of Papua New Guinea Slide 9 Lecture 9: Education Michael Cornish Measuring returns to human capital Why isn’t more invested in education? Problems? –Education as an end in and of itself

11. University of Papua New Guinea Slide 10 Lecture 9: Education Michael Cornish Child Labour A brief history Global child labour: 230 m –120 m children working full time 41% of African children, 21% Latin America, 17% Asia –130 m children working part time Every year, 20,000 children die in work- related accidents (1 every 26 mins)

12. University of Papua New Guinea Slide 11 Lecture 9: Education Michael Cornish Child Labour Multiple Equilibria Model Assumptions: –Households want to educate children –Work of adults and children substitutable Fair assumptions?

13. University of Papua New Guinea Slide 12 Lecture 9: Education Michael Cornish Child Labour Multiple Equilibria Model

14. University of Papua New Guinea Slide 13 Lecture 9: Education Michael Cornish Child Labour Ban it!? –Need income to support child –Family member school fees –Employers worse off –Imperfect knowledge about markets –Enforcement

15. University of Papua New Guinea Slide 14 Lecture 9: Education Michael Cornish

16. University of Papua New Guinea Slide 15 Lecture 9: Education Michael Cornish

17. University of Papua New Guinea Slide 16 Lecture 9: Education Michael Cornish

18. University of Papua New Guinea Slide 17 Lecture 9: Education Michael Cornish Child Labour 4 approaches –Eliminate poverty (increase wages) [World Bank] –Incentives to get children into school –Regulation [UNICEF] –Ban it! [ILO]

19. University of Papua New Guinea Slide 18 Lecture 9: Education Michael Cornish Case Study: Cocoa and the Ivory Coast

20. University of Papua New Guinea Slide 19 Lecture 9: Education Michael Cornish Case Study: Cocoa and the Ivory Coast 1.4 m tonnes cocoa 40% world production Labour intensive 30% of children engaged in child labour Hazardous activities... Trafficking of children

21. University of Papua New Guinea Slide 20 Lecture 9: Education Michael Cornish Case Study: Cocoa and the Ivory Coast Policy response: –World opinion –Harkin/Engel Protocol –International Cocoa Initiative: certification –Regional response

22. University of Papua New Guinea Slide 21 Lecture 9: Education Michael Cornish Women’s education Gender gap Why invest in women’s education? –Return higher –Population issues –Child health –Poverty burden

23. University of Papua New Guinea Slide 22 Lecture 9: Education Michael Cornish Demand, supply, and issues… Demand: –Prospect of employment –Education costs Supply: –Limited private schools –Centrally planned

24. University of Papua New Guinea Slide 23 Lecture 9: Education Michael Cornish Demand, supply, and issues… Issues: –Government wages –‘Filipino department store’ effect –Being overqualified

25. University of Papua New Guinea Slide 24 Lecture 9: Education Michael Cornish Private v Social Benefits of Education

26. University of Papua New Guinea Slide 25 Lecture 9: Education Michael Cornish Demand, supply, and issues… Social benefits of education –Labour productivity –Employment in education sector –Educating leaders of tomorrow Quality v quantity Brain drain