The Role of Education in Economic Growth: Theory, History, and Current Returns
23 Pages Posted: 4 Dec 2012
Date Written: November 10, 2012
The paper examines the role of education in economic growth from both a theoretical and historic perspective, addresses why education has been the limiting factor determining growth historically, provides estimates of the quantitative importance of the direct and indirect effects of education on the economy, calculates the marginal national return on investment for 60 countries, and examines the implications for government policy. The results indicate that in 2005 the national marginal product of education was over 10 percent in highly-educated countries and over 50 percent in the least educated countries. Achievement of these returns requires public investment because the direct return to the educated individual is insufficient to overcome the high cost of private financing.
Keywords: Education, National Returns, External Effects, History
JEL Classification: I25, N30
Suggested Citation: Suggested Citation