Education

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

• Education is a form of Human Capital
• Schooling vs Education?

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Trends and Patterns

• 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 many parts of
  the world at various levels
• Net enrollment rates are enrollments of those
  relevant age

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(No Transcript)
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Source Country fixed-effects instrumental
variable (IV) estimation in Table 6 of Barro and
Lee (2010).
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Fig. 8.1 Educational Attainment of the Adult
Population (ages 25-64)
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• Gross enrollment ratio (GER) or Gross Enrollment
  Index (GEI) to determine the number of students
  enrolled in school at several different grade
  levels (like elementary, middle school and high
  school),
• and examine it to analyze the ratio of the number
  of students who live in that country to those who
  qualify for the particular grade level.
• 'Gross Enrollment Ratio' the total enrollment
  within a country "in a specific level of
  education, regardless of age, expressed as a
  percentage of the population in the official age
  group corresponding to this level of education.

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• The Net Enrollment Ratio (NER) is enrollment of
  the official age-group for a given level of
  education expressed as a percentage of the
  corresponding population.
• For example, in 2005, Djibouti had the worst
  measured NER in primary education in the world at
  34.4. 
• http//data.worldbank.org/indicator/SE.PRM.NENR
• Thus, out of every 100 children within the
  official age-group for primary education, only 34
  were enrolled in school.

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Fig. 8.2 Educational Attainment of Adult
Population
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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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(2007) Source - U.S. Department of Education
http//nces.ed.gov/timss/figure07_2.asp
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Fig. 8.3 Learning Outcomes Reading Achievements
for 15 Year Olds
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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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Benefits of Education

• Present Value (PV) of all costs and benefits
• PVb Sum of the present value of all future
  private benefits (see 8.1)
• PVc Present value of all anticipated private
  costs (see 8.2)
• Internal Rate of Return is the rate or (r ) that
  which equates PVb PVc ( see formula 8.3)

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Education is a public good

• Education is a public good with a positive
  externalities
• The Private 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
• See figure 8.3 next for the relative rates of
  return of education at Primary, Secondary
  College levels for low, Middle, High Income
  countries
• What is level of education has the lowest
  highest return in LICs?

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Table 8.3 Returns to Schooling by Level and
Country Group
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Public expenditure on education ( of GDP) ()
HDI Country 1980 1990 2000 2010-2011
1 Norway 5.8 6.4 6.6 7.3
3 USA .. 5 4.7 5.1
10 Japan 5.2 .. 3.7 3.8
45 Kuwait 2.8 4.7 (2005) 3.8 (2006) ..
167 Rwanda 2.7 .. 4.1 4.7
186 Niger .. 2.9 3.2 3.8
186 Congo 2.3 .. .. 2..5
http//hdrstats.undp.org/en/indicators/38006.html
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Making Schooling More Productive

• Underinvestment
• Misallocation
• Improving schools
• Reducing the costs of going to school
• Inefficient use of resources
• More than the money