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Education Economics
"On ne voit bien qu´avec le coeur. L´essentiel est invisible pour les yeux." Antoine de Saint-Exupéry Education economics or the economics of education is the study of economic issues relating to education, including the demand for education and the financing and provision of education. The dominant model of the demand for education is based on human capital theory. The central idea is that undertaking education is investment in the acquisition of skills and knowledge which will increase earnings, or provide longterm benefits such as an appreciation of literature (sometimes referred to as cultural capital). Studies from 1958 attempted to calculate the returns from additional schooling. Later results attempted to allow for different returns across persons or by level of education. Statistics have shown that countries with high enrollment/graduation rates have grown faster than countries without. The United States has been the world leader in educational advances, beginning with the high school movement (1910–1950). When looking at correlations in the data, education seems to generate economic growth, however, it could be that we have this causality relationship backwards. We need to consider this possibility. For example, if education is seen as a luxury good, it may be that richer households are seeking out educational attainment as a symbol of status, rather than the relationship of education leading to wealth. Educational advance is not the only variable for economic growth, though, as it only explains about 14% of the average annual increase in labor productivity over the period 1915-2005. From lack of a more significant correlation between formal educational achievement and productivity growth, some economists see reason to believe that in today’s world many skills and capabilities come by way of learning outside of tradition education, or outside of schooling altogether. An alternative model of the demand for education, commonly referred to as screening is based on the economic theory of signalling. The central idea is that the successful completion of education is a signal of ability.
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