Economics of Education is the concept that lead us why do we go for education and what do we achieve from it. Please, take it only for your exploring your mind, keep in mind that your mental process can make better than this.
1. The Economics of
Education
PRESENTED TO: Dr. Shahzada Qaiser
Presented By: Bilal Iqbal (142208)
Muhammad Umar Farooq (142219)
M.A Education (L & M)
Evening; Session (2014-2016)
2. Overview
• There is a robust relationship between
education and earnings. Why ?
• What determines the level of education
selected by an individual ?
• How can we define Human Productive
Capacity?
• Individuals with more human capital
receive higher pay; How ???
3. What Economics is ???
• ALFERD MARSHAL; “It’s a Social
Science which deals with how human being
is performing his daily actions, it is the
study of efforts of human being at
individual and collective level, which is
robust relationship that how he/she get
strive for prosperity and how resources
should be utilized for maximum level of
utility.”
4. Education & Economics
• Every Country development is dependent
on two main factors;
• Natural Resource;
• Fertile Countryside, Forests, Minerals,
Canal & Rivers etc….
• Human Capital
• Well Educated, Skillful and Well Trained
5. Human Capital Model
• Human Capital;“an individual’s productive
capacity.”
• Human Capital may be increased by
investments in:
– Education,
– Training (Skill Development), and
– Health Care
• Individuals with more Human Capital
receive Higher pay (since they are more
productive).
7. Education as Human Capital
•Education = Investment in Human Capital
& Investment of Capital
•Education is responsible for social and
economic development.
•Human Capital declines with immobility.
8. Factors influencing Human
Capital Investment
•Interest Rate (toward Education and training)
•The age of the individual,
•The costs of education, and
•The wage differential between high school
and college graduates.
9. Creation of Wealth and Education
•Elements in the creation of wealth (labor, physical capital,
technology), are enhanced through education
•Educated workers are more productive
•All areas of resources are refined through education
•Human capital—greater productivity in management
Public sector Private sector
Education
Human Capital
10. Education: An Important Industry
•Education is the country’s largest industry .
•There is a positive relationship between education and economic growth.
•Economic philosophies affect fiscal matters and the educational program.
Marx Keynes Galbraith Friedman Smith
Communist;
advocacy of a classl
ess society in which
private ownership
has been abolished
and the means of pr
oduction and subsist
ence belong to the c
ommunity.
Government
Intervention;
Public ownership ,
which means that
production and
substance belongs
to govt.
Liberal;
An economic th
eory in favor of
laissez-
faire, the free m
arket, and the g
old standard.
Conservative;
(Monetarism)
An economic p
olicy based on c
ontrolling a cou
ntry’s money su
pply.
Capitalism;
An economic
system based
on private
ownership of
capital
11. A Public Sector Responsibility
• Government through Policies produces education services
• Private sector organizations respond to consumer demand
• Education--a political responsibility at three levels of
government through taxation
• Federal system-public education designed to produce equity
Private sector Public sector
Taxation
PKR
12. A Public Sector Responsibility
•As educational services increases, economic
productivity and wealth increases
•Educational system—result and determinant of social
and economic progress
•Education produces no free services
Producer’s Good—Human Capital
Consumer’s Good—Purchaser of Education
and wants as a consumer
13. Stimulates Economic Growth
•Education is important to increases in economic
productivity
•The scope of educational services are determined by
Constituency Members’ Experiences
Government Officials
Community (Society)
Those with no direct relationship to education
interest group.
14. Economic Benefits of Education
Range of Job Opportunities
Job Security
Taxes paid to state
Life Expectancy
Averages Earnings
15. • Increasing Expenditures and the Economy
Human Capital more important than Natural Resources
in wealth creation
High Education development overcomes lack of natural
resources
Poor Education System—lower individual economic
productivity
• Expenditures Benefit Individuals and
Society
Social mobility, higher status, increased appreciation
for arts and culture, increased participation in democratic
process
Family, neighborhood, business, society and culture
benefit
16. Cost-Quality Relationship to
Education
•Problems with establishing this relationship
lack a definition of high quality that is
measurable and acceptable to all concerned
goals of education vary from time to time and
place to place
•Research limitations
many variables contribute to student
achievement, not just spending
17. References
1)Taleem Ki Jahateyn Unit 9-1 (CODE TEC631) Writer: Ghulam
Rasool Muhammad (AIOU)
2)Haq, Ikram Ul and Ahmed, Pervaiz, “Knowledge Economy for
Pakistan Perspective” (2012). Library Philosphy and Practice (e-
Journal). Page 687
3)Http;//digitalcommons.unl.edu/libphilprac/687
4)Relationship between Education and Economic Growth in
Pakistan: A time series analysis. Journal of International Academic
Research (2011) Vol.11, No.1.