Columbia or High School? Understanding the Roles of Education in Development

February 1, 2002

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

No country has achieved sustained economic development without investment in education. Thus, education policy can play a vital role in facilitating development. But which types of schooling-secondary or tertiary-should public policy promote? This paper develops an analytical framework to address this question. It shows how the composition of human capital stock determines a country's development. Hence, promoting the "wrong" type of schooling can have little effect on development. In addition to identifying some characteristics of an optimal education policy, the paper helps in understanding why empirical studies have failed to find a significant relationship between schooling and growth.

Subject: Education, Financial institutions, Human capital, Labor, Skilled labor, Stocks

Keywords: demand and supply, demand linkage, development, East Asia, education, education investment, growth, Human capital, private cost, rate of return, schooling cost, schooling externality, schooling investment decision, Skilled labor, Stocks, tertiary schooling, WP

Pages:
43
Volume:
2002
DOI:
https://doi.org/10.5089/9781451845464.001
Issue:
036
Series:
Working Paper No. 2002/036
Stock No:
WPIEA0362002
ISBN:
9781451845464
ISSN:
1018-5941

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