1. 1 Chapter 8 Education Norton Media Library Dwight H. Perkins Steven Radelet David L. Lindauer

2. 2 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

3. 3 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

4. 4 schooling generates an attractive private and social rates of returns yet, countries tend to underinvest in schooling! insufficient or misallocated resources lack of accountability

5. 5 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

6. 6 in high-income countries: gross enrollment rate (in schooling beyond high school) is around 60% in middle-income countries: 22% in low-income: 10%

7. 7 Fig. 8.1: Educational Attainment of the Adult Population (ages 25-64) 7

8. 8 Table 8.1: Changes in Schooling, Gross Enrollment by region, 1970-2000 8

9. 9 Fig. 8.2: Educational Attainment of Adult Population 9

10. 10 Table 8.2: Estimates of Enrollment for Adults 25 and over by Gender and Region 10

11. 11 Schooling versus Education There is a gap between rich and poor nations in educational quality Learning Outcomes also vary (see figure 8.3)

12. 12 Fig. 8.3: Learning Outcomes: Reading Achievements for 15 Year Olds 12

13. 13 The Benefits of Education Education is an Investment Education is a human capital investment Internal Rates of Return to Schooling Estimated Rates of Return 13

14. 14 Fig. Earnings by Age, Education, & Gender in Nicaragua,1998 14

15. 15 Fig. 8.4 Earning by Age, Education, and Gender, Nicaragua, 1998 15

16. 16 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.

17. 17 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