Education and Development: Measuring the Social Benefits

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Clarendon Press, Jan 27, 2000 - Business & Economics - 314 pages
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This book develops a new approach to measuring the total returns to human resource development through investment in education. Drawing on microanalytic foundations, it uses regional and worldwide data to estimate the net marginal contributions of education and new knowledge both to economic growth and to wider effects on democratization, human rights, political stability, health, net population growth rates, reduction of poverty, inequality in income distribution, crime, drug use, and the environment. The total impact of education policy changes on endogenous development is then estimated using an interactive model. This new approach is important to industrialized and developing countries alike. The diffusion of knowledge and the adaptation of new techniques has been identified as crucial to the growth process in the new endogenmous growth models, and is of increasing strategic importance in current knowledge-based globalizing economies. Similarly, the non-monetary returns from education are important in improving human welfare. Measurement of these non-market returns is a crucial but much neglected subject. It has proved frustrating, and existing microanalytic measures have proved piecemeal. The new approach developed here offers some comprehensive estimates and simulation techniques for finding more cost-effective policies, and also suggests new hypotheses for further microanalytic testing.
 

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Contents

1 Measuring the Returns to Education
3
Recent Advances in Measuring Education Outcomes
4
Endogenous Development Defined
5
Other Recent Work
7
The Conceptual Framework
9
The Framework for Endogenous Development
10
Uses for the Conceptual Framework and the Results
14
Part II Economic Growth
17
8 Poverty and Inequality
111
The Conceptual Framework
112
Rural Poverty
115
Urban Poverty
117
Income Inequality
119
Empirical Determinants of Inequality
121
Distributive Justice
123
Conclusions
124

2 Human Capital Endogenous Growth Models and Economic Development
19
Human Capital in Economic Growth Models
20
Endogenous Growth and Related Research
21
The Production Function
22
Investment and Saving Rates
26
Population Growth Rates
31
Endogenous Growth and Endogenous Development
33
3 Education and Growth in East Asia
34
The ReducedForm Production Function
35
Definitions and Data Sources
36
Econometric Properties
38
Impacts of Education on Growth
42
Feedback Effects
44
Feedback Effects and Simultaneity
47
Other Factors Including Controls
48
Conclusions
49
4 Education and Growth in Latin America
52
The ReducedForm Production Function
53
Properties of the Growth Estimates for LAC
55
Empirical Determinants of Growth in Latin America
58
Investment in Physical Capital and Total Saving
62
International Trade Impacts
65
Tracing the Impacts of Education on Growth in Latin America
66
WITH ALI ARIFA
68
Current and Simulated Future Per Capita Economic Growth
69
Education and Per Capita Growth in Africa
71
Population Growth Capital Dilution and Slower Growth
75
Conclusions and Development Strategies
76
Part III Measuring the Nonmonetary Benefits
79
6 Health and Net Population Growth
81
An Overview
82
Infant Mortality
83
Life Expectancy
85
Population Effects via Fertility Rates
86
Net Population Growth Rates
88
Alternative Direct Estimates
90
Conclusions
91
7 Democracy Human Rights and Political Stability
92
The Conceptual Framework
94
Determinants of Democracy
96
Human Rights
101
Political Stability
105
Conclusions
109
9 The Environment
125
The Conceptual Framework
126
Deforestation and the Destruction of Wildlife
128
Water Pollution
133
Air Pollution
136
Conclusions
139
10 Education and Crime
141
Background and Structural Rationale
142
The Determinants of Violent Crime
143
The Determinants of Property Crime
147
Summary and Conclusions
151
Education and Economic Development
153
A Summary
155
Effects of Education on Economic Growth by Region
158
The Education Sector in the Complete Model
162
Investment in Education Access and Education Reforms
167
Summary of the Nonmarket Marginal Products of Education by Sector
170
The Complete Model
179
Continuing Current Policies
180
Education Policy Changes and Measurement of Net Effects
185
Latin America
186
East and South Asia
193
Africa
208
OECD Member Countries
214
13 Separating and Valuing the Direct and Indirect Effects of Education
227
Empirical Measures of Direct and Indirect Effects on Growth by Region
231
Direct and Indirect Effects on Nonmarket Outcomes
242
Valuing the Impacts of Education
246
Social Rates of Return
248
Optimal Efficiency in ExpenditureTaxation Levels
253
Valuing Distributional Effects via a Bergson Welfare Function
254
Valuation of Outcomes by Political Decision Processes
256
Conclusions
259
Measuring the Social Benefits Convergence and Policy Dialogue
261
Conditional Convergence?
263
Measurement of the Social Benefits of Education
265
The CostEffectiveness of Nonmarket Returns
266
Measurement of Externalities and Distributional Effects
267
Policy Dialogue as a Development Strategy
268
Conclusion
270
Bibliography
273
Index
285
Copyright

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Page 3 - The consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them, it is hard to think about anything else.
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About the author (2000)

Walter W. McMahon has been Professor of Economics with a joint appointment as Professor of Education at the University of Illinois at Urbana-Champaign since 1972, specializing in the economics of education and human capital, and in macroeconomic theory and analysis. He has worked in many developing countries, including acting as Chief Economist on the 25 Year Plan for Education in Indonesia, and conducting education sector assessments for the governments of Nepal, Pakistan, Indonesia, and Kuwait.

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