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 Schooling vs Education?

3. 3 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

4. 4

5. 5 Source: Country fixed-effects instrumental variable (IV) estimation in Table 6 of Barro and Lee (2010).

6. 6 Fig. 8.1: Educational Attainment of the Adult Population (ages 25-64)

7. 7 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.

8. 8 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%. Djibouti 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.

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

10. 10 Schooling versus Education There is a gap between rich and poor nations in educational quality Learning Outcomes also vary (see figure 8.3)

11. 11 ( 2007) Source - U.S. Department of Education http://nces.ed.gov/timss/figu re07_2.asp http://nces.ed.gov/timss/figu re07_2.asp

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

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

14. 14 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)

15. 15 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.

16. 16 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?

17. 17 Table 8.3: Returns to Schooling by Level and Country Group

18. 18 HDICountry1980199020002010-2011 1Norway5.86.46.67.3 3USA..54.75.1 10Japan5.2..3.73.8 45Kuwait2.84.7 (2005)3.8 (2006).. 167Rwanda2.7..4.14.7 186Niger..2.93.23.8 186Congo2.3.. 2..5 http://hdrstats.undp.org/en/indicators/38006.html Public expenditure on education (% of GDP) (%)

19. 19 Making Schooling More Productive Underinvestment Misallocation Improving schools Reducing the costs of going to school Inefficient use of resources More than the money