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Evidence of returns to schooling in Africa from household surveys
T. Paul Schultz, Yale University
Center Discussion Paper No. 875
December, 2003

http://www.eldis.org/cf/search/disp/DocDisplay.cfm?Doc=DOC22336&Resource=f1educ

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Introduction
In the last two decades, many countries in Africa have had difficulty extending primary and secondary schooling to an increasing fraction of their youth, or in building high quality university training and parallel research institutions. Opinion is divided on how to refocus resources and determine priorities to improve the prospects for the future. This paper reviews some of the economic arguments for specific policies and examines empirical evidence that can be assembled from household surveys which may help assess the claims and counter-claims advanced for various proposals.

If "public good aspects" of human capital and positive social externalities of human capital are an important justification for public investments in education, have we empirically documented the magnitude of such social benefits to calibrate how public resource priorities should be influenced by these externalities? The justification of public expenditures on human capital requires not only that these investments earn a satisfactory overall social return (private returns plus net public spillovers), it also requires that the distribution of these social returns across individuals and groups in the society is equitable or narrows existing inequalities in society.

Education is sufficiently valued by most of the world’s elite socioeconomic classes that these influential groups consume a disproportionate share of public sector resources in education, especially in higher education. What are the options for improving the personal distribution of benefits from public expenditures on education, and are there "best practices" which might be replicated in Africa to channel more of the benefits of education to the children of the poor? Can poor societies manage to achieve a more equitable access to higher education by quotas, targeted subsidies, scholarships, or student loans? Has the effort to reduce the educational gap between men and women been successful? How does the globalization of trade and capital markets, along with the decreasing cost of immigration, particularly for educated workers, change the landscape and modify the maneuverability of national educational policy in Africa and other regions where incomes are on average low?

I will focus mainly on the two salient economic criteria for performance of public policy, that of efficiency or increasing outputs for a given level of public and private costs of inputs, and of equity or increasing the share of the private net benefit (in excess of the private costs) received by the poorer strata of society. The poorer social strata include typically those families residing in rural areas and remote towns, and children born into families in which economic resources are least adequate, and to parents who are themselves the least educated in their birth cohort. The political institutions needed to achieve a more efficient and equitable educational system in Africa are likely to be paramount. But this paper, unfortunately, discusses only a few of the economic considerations.

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