The economy of education

Résumé du document

Seen from an economic perspective, education is an investment. It represents a spending today, which must produce an additional amount of wealth and comfort tomorrow. The cost of education is quite high. In France it represents 6 to 7% of the gross domestic product (GDP). Moreover, you must add to this percentage the opportunity cost of the time spent in school or university instead of working which could produce wealth immediately. Some effects of education on health, democracy, personal development, etc. are invaluable and therefore hardly measurable. Thus, without miscalculating them, the economist usually focus on an easily measurable scale, which is wealth measured by the GDP or the individual income. Does more education produce more wealth, and under what conditions may it produce more wealth? These are the main questions which are asked of the economy of education in order to assess the return on educational investment.

Extraits

[...] Finally, it must be said that in terms of schooling, individual choices are very heterogeneous so how governments could reduce school abandonment? According to Dagenais work, a high minimum wage encourages to work during studies, which harm school results and increase school abandonment. This observation is in favour of a lower minimum wage for students. Moreover, a low unemployment rate strongly increases the probability to stop ones studies especially in the working class. Likewise, the raising of the minimum age to work could be an efficient measure to decrease school abandonment. [...]

[...] So, that is all I had to say on the first part, which concerned the impact of education on the economy. Now I would like to move on to the second one, which deals with the conditions to improve the education results. II. Some conditions to improve the results of education In the previous part, we have seen that the education has a fundamental impact on the economy. Thus, it's important to describe the conditions in which one's education benefits from a better output. [...]

[...] In the bosom of this conception, two complementary visions have been developed. The first one suggests that the activities of research and development, by accumulating an immaterial stock of ideas and knowledge, help to increase the efficacy used to produce wealth from capital and work. By increasing the level of education and consequently the number of high skilled-workers, which may participate to this accumulation of knowledge, we increase the rate of discoveries and the possibilities of growth. Here, the rate of growth rises with the level of education and not any more with the rate of education growth. [...]

[...] Nevertheless, the economist Solow, has demonstrated, at the end of the fifties, that those two elements explained only a small part of growth. Consequently, the education level has been considered as an additional factor of production. Mechanically, if the stock of education grows more rapidly between two dates, the wealth will experience the same increase. I will present an empirical evaluation of this economic pattern but before, I've got to say that much of the evaluations in the economy of education are controversial. Indeed, it's difficult to assess the impact of something immaterial as knowledge on economy. [...]

[...] The average classes' size in the ZEP is 21,9 against 23,2 in other neighbourhood. It has been demonstrated that this small reduction contributes to shorten of 10% the success gap between the two kinds of school. If we reduce the size of ZEP classes to 18 pupils per class the success gap will statistically fall of 40%. About the private or public school, according to Milton Friedman the resources are indifferent, to get better school you've got to put them into concurrence and the bad ones will vanish because of the market sanction. [...]