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 (1970, 1996)
|
|
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% dev, 41 % SSA – 26% LA
Secondary education private rate of
return: 12% dev, 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.
Then one could add in a story about
the positive spillovers; the public goods aspect to education.
Primary education social rate of
return: 14% dev, 24 % SSA – 18% LA
Secondary education social rate of
return: 10% dev, 18 % SSA – 13% LA and
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 providing a certain kind of 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?
Public recurrent expenditures on
schooling.
|
|
Primary |
Secondary |
Tertiary |
|
Expenditure (% of total) |
43% |
28% |
20% |
|
|
Preprimary |
Primary |
Secondary |
Tertiary |
|
|
13% |
32% |
45% |
10% |
|
|
9% |
34% |
36% |
21% |
|
|
|
|
|
|
|
|
11% |
46% |
32% |
11% |
|
|
10% |
43% |
30% |
16% |
|
|
|
|
|
|
|
|
2% |
85% |
12% |
1% |
|
|
2% |
49% |
29% |
20% |
|
|
|
|
|
|
|
|
7% |
80% |
12% |
2% |
|
|
1% |
49% |
29% |
20% |
|
|
|
|
|
|
|
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.
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://unesdoc.unesco.org/images/0017/001787/178740e.pdf
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.