Economics of education and its significance
- It costs money i.e. it involves private expenditure and public expenditure.
- It has an opportunity cost e.g consumption, capital accumulation.
- It is an investment in human capital development.
- It is usually a longterm investment programme.
- It is quite instrumental in training more manpower necessary for development.
- For its own sake, people acquiring knowledge become informed, and aware of the environment of the world around them.
- It is a form of consumption yielding utility to the recipient just like other consumer goods.
- It influences the attitudes of the people towards work e.g in the agriculture sector by changing people's culture and tradition.
- It creates awareness which promotes easy implementation of rural development programmes.
- Education tends to improve people's incomes, thereby raising their standards living.
- It should further be noted that education has social benefits in terms of not only high income earnings, but also status in society.
- It promotes the development of technology which is necessary for economic progress of the economy.
- Education leads to increase the scope of discovery that helps the implementation, improvement and exploitation of the existing domestic idle resources.
- With high levels of education especially among females, the alarming population growth rate, can be checked.
- Intellectual dualism can also be reduced with massive education programmes
- High levels of education, it is urged, improves people's welfare, thereby raising their life expectancy.
- Income earning from the educated persons can be taxed. This increases country's taxable capacity.
- The prevalent subsistence sector can also be reduced by increased awareness through education.
- Education creates several employment prospects e.g to teachers, construction workers, stationery and textbook sellers, uniform manufacturers, etc.
- Education may also lead to an increase in aggregate demand, production and expanded GDP. This is because the incomes received by the educated can lead to high purchasing power.
However, education plays a negative role in development in that:
- It may lead to rural urban migration resulting from the defective education system which tends to create more job seekers than job makers.
- It can prove to be a mis-investment if the skilled trained labour force remains unemployed.
- It affects income distribution through salaries and wages which widen income gap between the employed educated persons and the unemployed.
- It could retard economic growth if the majority remain unemployed and the educated ones start demanding non essential (luxury) goods like cars, television sets, refrigerators, mobile phones, etc.
- Underdevelopment of rural areas is common. This is because the educated tend to concentrate their development projects in urban areas.
- High levels of education may lead to brain-drain.
- There are also problems associated with the school dropout.