Human Capital 1: Education.
Health
Health and
education. Building up the capacities
of human beings through better health and education.
Improved health and education
are both objectives of development.
Recall HDI.
Improved health and education
are also critical components of growth and development.
We are interested in both
aspects of human capital both as a means and an ends of development.
Focus on education first.
Recall the Millennium
Development Goals.
http://mdgs.un.org/unsd/mdg/Data.aspx
Goal 2. Achieve universal primary education
Target
3.
Ensure that, by 2015, children everywhere, boys and girls alike, will be able
to complete a full course of primary schooling
Indicators
6. Net enrolment ratio in primary
education (UNESCO)
7. Proportion of pupils starting grade 1 who reach grade 5 (UNESCO)b
8. Literacy rate of 15-24 year-olds (UNESCO)
Some
evidence of international convergence in education measures (note contrast to
income story). A variety of measures suggest things are
getting better in developed countries at a faster rate than in developed
countries for some measures.
School enrollment rates,
Teacher-pupil ratio, schooling years.
Averages differ still, but rates of change are higher for developing
countries. Contrast 1970 and 1996
figures
|
|
Advanced |
SSA |
|
MENA |
|
Primary Enrollment Rate |
103, 102 |
63, 87 |
73, 104 |
86, 98 |
|
Secondary Enrollment Rate |
70, 111 |
10, 29 |
25, 48 |
37, 69 |
|
Average School years |
7, 9 |
1, 2 |
3, 4 |
4, 6 |
|
education enrolment ratios |
|
|
|
Total enrolment, regardless of age,
divided by the population of the age group which corresponds to a specific
level of education. The net enrolment ratio is calculated by using only that
part of the enrolment which corresponds to the age group of the level
considered. |
|
Reference |
|
United Nations Educational,
Scientific and Cultural Organization. Revised Recommendation concerning the
International Standardization of Educational Statistics. |
There is also progress on the
female to male enrollment ratio, where again we have 1970, 1996 figures
reported.
|
|
Advanced |
SSA |
|
MENA |
|
Primary Ratio |
1, 1 |
0.71, 0.84 |
0.75, 0.90 |
0.76, 0.94 |
|
Secondary Ratio |
0.92, 1.04 |
0.47, 0.73 |
0.58, 0.87 |
0.61, 0.93 |
Note that convergence here
can reflect the nature of the measure (up to 100% enrollment rate, can’t get
higher. Only so many
years of school feasible).
Contrast to income that has
no inherent upper bound.
Also, leaves out qualitative
difference once quantitative difference is no longer possible.
Returns to
education.
Figure 8.1: Age-Earnings Profile
Figure 8.2: Financial Tradeoffs in Decision to Continue
school
Table 8.1 and reading: returns to investment in education.
Primary education private
rate of return:
22% developed, 41 % Sub-Saharan
Africa, 26% Latin America
Secondary education private
rate of return:
12% developed, 41 % SSA, 17%
LA
Social rates of return look
at pre-tax returns and cost of education is full amount of resources, not just
that part paid for by the student.
Public
goods aspect to education, but no valuation of spillovers.
Primary education social rate
of return:
14% developed, 24 % SSA, 18%
LA
Secondary education social
rate of return:
10% developed, 18 % SSA, 13%
LA and Asia
Consider the demand for education. In some sense, the demand for education is
derived from the demand for different types of jobs that require education (the
objective is not the education in and of itself, but what it can do for the
individual).
Rising
population, already unemployment and underemployment, limited formal sector job
opportunities.
Why do people keep seeking
education in such a situation?
Think back to the migration
model – a similar logic applies here.
Impact on increased income associated
with that level of education.
Impact on
increased probability of getting a job at this income level.
Both play a role in expected
income.
Balance against the direct
and opportunity of continuing education.
Education
competing against the alternative of child labor.
Education used as a sorting
device by employers, signaling device by individuals.
Education
as an alternative to unemployment, perhaps in the hope that things will get
better in the future.
The supply side of education
is usually driven by policy decisions by governments, so that is where we are
focusing. Does the supply side make
sense as a set of public policy decisions?
Figure 8.5. Marginal analysis of marginal costs and benefits to education.
What
is the added benefit / cost of an incremental increase
in schooling. Comparison
at the private and social level.
Returns
always exceed costs for private, and for most all of social.
Marginal
private returns always exceed marginal private costs, but marginal social cost and
marginal social returns are equal at the primary level, MSC> MSR above.
Social
marginal returns and benefits are equal at lower levels of education.
All
offer a positive rate of return, but the marginal decision is to allocate
resources to primary education.
Is
this what we observe?
Distribution of students
across education level as a contrast to the distribution of public recurrent
expenditures on schooling:
|
|
Preprimary |
Primary |
Secondary |
Tertiary |
|
|
2% |
85% |
12% |
1% |
|
|
2% |
49% |
29% |
20% |
|
|
|
|
|
|
|
|
7% |
80% |
12% |
2% |
|
|
1% |
49% |
29% |
20% |
|
|
|
|
|
|
|
Colombia
Students |
11% |
46% |
32% |
11% |
|
|
10% |
43% |
30% |
16% |
|
|
|
|
|
|
|
Brazil
Students |
13% |
32% |
45% |
10% |
|
|
9% |
34% |
36% |
21% |
|
|
|
|
|
|
|
Phillipines Students |
3% |
60% |
24% |
13% |
|
Phillipines
Expenditure |
0% |
61% |
22% |
14% |
|
|
|
|
|
|
|
UAE Students |
9% |
37% |
42% |
12% |
|
UAE
Expenditure |
7% |
47% |
45% |
0% |
UNESCO
data, mostly 2003 data.
http://stats.uis.unesco.org/unesco/TableViewer/document.aspx?ReportId=198&IF_Language=eng
Mali example
For some more statistics and
a cross country set of comparisons look at:
2004 report:
http://www.unesco.org/education/docs/EN_GD2004_v2.pdf
2006 report:
http://unesdoc.unesco.org/images/0014/001457/145753e.pdf
2008 report:
http://portal.unesco.org/education/en/ev.php-URL_ID=49591&URL_DO=DO_TOPIC&URL_SECTION=201.html
Spending
per student in higher education in
Inequalities
in the distribution of education.
Can compute a Gini curve of education distribution as
we did for the income distribution. What percent of the population has received
what percent of the education?
Gini of 0.61. Mean is 1.8 years (the average
person in the household spent 1.8 years in school). Note this is not sorted for over 15’s as is
done in the book.
|
|
N’gambo |
Logologo |
Dirib
Gumbo |
Sugata
Marmar |
|
Kargi |
|
Average
Years |
3.5 |
2.3 |
2.1 |
1.4 |
1.0 |
0.6 |
|
Gini |
0.31 |
0.64 |
0.45 |
0.68 |
0.67 |
0.76 |
Overall relationship in cross
country comparisons is that as average years of education goes up, the
education Gini goes down. Perhaps not
surprising, as there are limits to how long one can spend in school.
Low
average education and high inequality in education are associated. This would suggest that education does not
focus on primary to begin with.
Can
increased education increase inequality?
At some level, it may. Table 8.3. Share of
public resources for education divided by the share of the population.
Farmers: .49 (ME and NA) to .95 (OECD).
Blue collar: .35 (ME and NA) to 1.19 (Anglophone Africa)
White collar: 1.2 (OECD) to 5.93 (Francophone Africa).
Kids of already higher class
families are the ones to get to higher education.
They can afford the direct
costs, they can pass up the opportunity cost of child labor, they are in the
city where the opportunities are…This could support the argument that education
policy can lead to a transfer of wealth from the poorer to the wealthier.
WB calculates benefits
incidence for public subsidies to education.
Overall, the lowest 40% income class gets 43% benefit incidence from
total education spending. However, for
tertiary education this figure is 10%.
If
the kids are not in school, where are they?
Child labor.
Takes them away from school, diminishing future
prospects.
Work
is often physically debilitating, diminishing future prospects.
Objectionable from a normative standpoint.
120
million in developing countries working full time, another
130 million part time. (ILO)
What
happens if we ban child labor?
First,
let us assume that households with high income will not send children to work –
child labor reflects poverty.
Second,
let us assume that adults can perform the tasks that child labor performs
(substitutes). Nothing
special about their little fingers or what have you.
Ban
child labor, raise wages for adults could address the problem of child labor.
If
child labor is banned and the adult wage increases, will the firm relocate
(perhaps to an area where no such ban is in place)? Could banning child labor lead to both the
loss of the child’s income and the other incomes associated with the industry?
Concern
about these impacts has lead to an alternative approach.
1) Focus on eliminating poverty rather than child labor –
the assumption is addressing the former will take care of the latter.
2) Increase incentives and opportunities for children to
go to school. Can make education
compulsory, but absent effective enforcement, better to focus on
incentives. More places, local schools,
free food,…
3) Accept child labor is going to happen, but work to
implement policies that require children get time off for school, provide
services for working children and their families,…
4) Work towards goal of banning child labor worldwide by
banning it in its most abusive forms. “Worst
Forms of Child Labor Convention” (ILO 1999).
5) Trade sanctions on countries that permit child
labor. If children move from export
sector to informal sector, may not help the children.
What about gender inequality
in education?
Educational gender gap. Females receive less education than males in most
developing countries.
Female
literacy rate for all developing countries is 71% of male literacy rate for
developing countries taken as a whole.
Primary school enrolment approaches male levels (91%), but secondary
declines to 72%, while post secondary is 51% of male enrolment.
Why
might we think this is something that needs to be addressed?
1) Normative.
2) Educating females leads to lower population growth
rates.
3) Educating females leads to better household nutrition.
4) Education of females leads to higher health standards.
5) Educating females leads to better education of
daughters.
6) Higher marginal returns.
7) Females are disproportionately poor, so if education
leads to jobs, addressing poverty and addressing female education are linked.
Missing women mystery. Demographic
structure indicates the female to male ratio is related to culture and level of
development.
Female:
male ratio is around 1.05 in Europe, .91 in
Summary
1) Demand for higher levels of education can be a
response to a demand for formal sector jobs.
2) Demand for higher levels of education can be a
response to individuals seeking alternatives to unemployment /
underemployment.
3) Since higher employment is often expensive and located
in the larger cities, higher education and hence opportunities for formal
employment go to the children of families of already relatively wealthy,
already resident of urban areas.
4) If the government does decide to subsidize higher
education, it is not the most efficient use of societal resources, and can also
lead to transfers of wealth from the poor to the wealthy.
5) Structure of education also leads to a focus of a few
extremely specialized people, when more generalists would be more socially
beneficial.
6) Further concerns can be raised about the role of
governments in allocating spaces. Is it
a form of patronage rather than a meritocracy?
7) Is education a signaling device almost exclusively,
rather than a transfer of skills and knowledge?
8) Child labor needs to be addressed in tandem with
education policy.
9) Explicit focus on girl’s education is needed.