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Although the paper dismisses the idea of a screening hypothesis when it comes to the increased employability due to education, it introduced some of the reigning arguments against public investment in education. My immediate response to this hypothesis was that the author failed to consider externalities or at least failed to place substantial weight on the social benefits to education. Much of the discussion of education investment in contemporary politics is concerned with the social returns of education. The article addressed that because considering the social costs of education is easier to quantify than the social benefits, the social returns are often lower than the private returns. However, if we were able to construe the social benefits that will most likely disproportionately advantage the poor, we may see that the returns to education are significant. Maybe this inability to recognize these positive externalities by rich politicians stems from their experienced returns from education at the private level. Or it may be their constrained view of economic advancement in which only investments with clear monetary returns are salient. I am disappointed to see politicians continue to threaten the future of public education at the expense of the lower class’s most important mechanism for social mobility. In addition, we have a significant portion of untapped talent sitting through an inefficient public education. If we don’t begin to realize the social benefits of subsidizing education for a disadvantaged population that may host a pool of unfulfilled talent, we may not ever keep up with technological progress that is imperative to society’s well-being and future existence.

Mercer Peek

It is interesting that while private returns to schooling are highest in Latin America and sub-Saharan Africa, they are the lowest in the Middle East and North Africa. The paper shows a general trend of returns to education falling as income increases. It is therefore unsurprising that Latin American and sub-Saharan regions, some of the world’s poorest, see high private returns to education. I would then expect wealthy countries to see the lowest returns, but it is the Middle East and North Africa. The paper attributes this to factors such as “corruption, natural resources and poor academic performance,” but I am not convinced this is the full explanation. I don’t have data, but I think that corruption in Latin American and sub-Saharan governments is on par with that of Middle Eastern and North African. It is true that the Middle East and North Africa are particularly wealthy in natural oil and gas, but so is South America and parts of sub-Saharan Africa. I also don’t think a blanket statement about academic performance is particularly convincing. I wonder if some part of this dynamic isn’t due to the fact that female rights are suppressed more in the Middle East and North African countries than nearly anywhere else in the world. 7 out of 10 of the worst countries for women to live in as listed by Georgetown’s Women Peace and Security Index are in the Middle East or Northern Africa. Women couldn’t drive until 2 years ago in Saudi Arabia. If a girl is even lucky enough to get an education, it isn’t going to take her very far if she can’t leave the home alone. Furthermore, private returns to education are 2 percentage points higher for females. If you are actively suppressing or even just not encouraging the half of your population with a higher return to education, that is really going to kill your overall returns.

Olivia Indelicato

Overall, I was greatly impressed by the comprehensiveness of this paper, although like Stephanie and Mercer have addressed, the large task of attempting to analyze returns to education in over one thousand countries leaves many issues, theories, and complexities unaddressed. I’m interested in the “race between education and technology” that the authors mention but do not go into great detail on. It will be interesting in the context of the 4th IR to see how as technology increases automation, how returns to education will change, both in developing and developed countries. The authors explain that there is evidence to suggest that educational advancements were insufficient to countervail demand due to technological progress, and that the rising inequality implies that technology is winning this race. Surely higher education will change in relation to changing technology, and it will be interesting to see how this effects the “race.” I also found the ways this paper support what we have discussed at length in class about the importance of investment in women’s education as a development priority. It is interesting that the gap between investment in men and women’s education has actually increased over time, and I would be interested to understand mechanisms are behind the reason for the increased gap. I also thought it was interesting that economists are attempting randomized controlled experiments in which they will analyze the lifetime earnings of members of voucher programs, which greatly affected the number of years of schooling. Overall, it is clear that investment in education is vital, and that investment in women’s education is especially vital in developing countries.

Sarah Hollen

I know we have discussed it quite a bit in class, but after reading this paper and seeing evidence again of the enormous private and social returns to education, I am still shocked that investment in education is not more of a priority—- in some low-income countries but especially in the U.S. As noted in the paper, the existing body of literature on this subject generally measures education levels in terms of years of education, or completion of education at the primary, secondary, or tertiary level. Still, as most high income countries have universal primary education and high secondary education completion rates, turning to school quality to evaluate the returns to education (with the hope of increasing these returns by addressing school quality issues) seems like a logical next step for high income countries and something that should be considered as low-income countries invest in education. The authors mention that future updates to these models will indeed attempt to estimate returns to education based on school quality, specifically through micro studies that investigate the returns to specific school quality inputs. This reminded me of recent research that we have discussed in my economics of education class, which estimates returns to school quality inputs such as teacher quality and class size. Overall, results in many studies that examine these issues are somewhat inconclusive, in large part due to the difficulties of eliminating biases, though teacher quality is typically acknowledged to be a factor in student outcomes. As more research in this area is conducted, I am interested to see what new insights will be presented.

In the context of this paper, the authors point out that North Africa and the Middle East is an outlier in the sense that private returns to schooling are low, given the relatively low average years of schooling in this region. In hypothesizing about these low returns, the authors cite factors such as corruption, natural resources, and poor academic performance. Given that the trend of higher returns to education in low-income countries holds for most regions, I think it is likely that the quality of education in North Africa and the Middle East is particularly low; as Mercer pointed out, I think this probably has a lot to do with gender disparities and the low quantity and quality of education available for girls. This presents challenges and opportunities for development; I wonder if there may be benefits to starting from the ground (basically no existing education system, very little investment in education, or overall low levels of educational attainment) when initiating investment in education with a focus on both the quantity and quality of schooling. This is in contrast to a country such as the U.S., which is struggling to reform an existing education system that generally produces high quantities of education, but education that is of low quality for many students, especially low-income and minority students who could benefit the most from high quality education.

Christina Cavallo

It was no surprise to me to read that the paper concluded that the “returns are highest for primary education, the general curricula, the education of women, and countries with the lowest per capital income” and “that primary education continues to exhibit the highest social profitability in all world regions”. Considering that there isn’t much empirical evidence on the social benefits of education, and considering that the social rate of return estimates are usually just based on the monetary costs and benefits of education, it is obvious that these benefits are lower than what they actually are. There needs to be an extensive effort to look at the social benefits beyond just money. There are far more important social benefits such as the saving of human life and the bettering of human wellbeing. This, I would argue, is more important than just money.

One aspect of the paper that I found to be especially interesting was the discussion of credential effects vs earnings premium. The difference between the idea that the increase in earnings are due to increased productivity from schooling (human capital) vs the idea of the screening hypothesis that employers select workers with higher qualifications to reduce their risk of hiring someone with a lower capacity to learn seems to be difficult to differentiate. It makes sense that people would be more productive if they were more educated. It also makes sense that employers would choose workers with higher qualifications to reduce their risk of hiring someone with a lower productivity rate. Layard and Psacharopoulos found no support of the screening hypothesis as they differentiated between the weak version of screening when hiring and the stronger version of screening after years on the job. I am curious as to why this data contradicts other evidence that shows the earning gap between more and less educated workers increases over time. I think it is important to note that just because someone is less educated does not mean that they do not have the ability to have high productivity. From this, I think it is also important to realize the importance of making education accessible to everyone and not just those who can afford it.

Another aspect that I think deserves attention is the idea that, because of modernization, it is extremely difficult to compare our future to our past. Relying on the past to assess current investment decisions requires too many assumptions that do not hold true. Wage patterns have changed as has the stability of the economic environment. In this regard we also need to consider the race between technology and education - and technology’s fast pace. In all, I think we should learn from Chile’s “voucher school” and Colombia’s lottery system and understand that spending on human capital is a good investment.

Gus Wise

I have found our section on health, education, and human capital incredibly interesting as it shows how investments in people can be one of, if not, the best ways to increase development. The paper makes the point very clear by explaining the rates of return for education in throughout the world. With all of the positive research that has been done to show the importance of health and education in development, investment in these aspects of human capital is still largely neglected by the private sector. As we know from class and reading, this is because the private sector is not willing to pay the additional costs of education for people. We also know that there is positive social benefit that exceeds the private costs of investment in education. The paper notes that taking externality into account shows that the social rate of return for investment in education is incredibly high. The research shows that investments in health and education make everyone much better off, especially so in low- and middle-income countries. Yet, despite all of this the investment still is not enough.

One thought that I have has to do with the education system of the United States. In development economics, to see how far along a country is in development, it is always compared to the US. Whether it is evaluating living standards or the value of a country’s currency in comparison to the US dollar; the US seems to be the model for other countries to follow. With regard to healthcare and education, the systems in the US have their flaws. I think that if the United States government were to put more investment into its own education system, other countries would follow as well, and development throughout the world would increase even more.

Mason Shuffler

It is quite astonishing seeing the empirical results of investments in education. I have been able to experience this firsthand, as my hometown in Louisiana is notorious for having a very poor and underfunded public education system. What is even more surprising about our public school system is that there is very little concern amongst the general population about improving it. The schools struggle across the board--from quality in education to attractive facilities and solid teaching. It is remarkable how significant both the private and social benefits are in education and how this should serve as a signal to institutions that it is their obligation to invest. Moreover, as we discussed last week, the gender disparities that are associated with education are unsettling to see. Women tend to see greater returns in education, most likely because on average women have a smaller quantity of education than men to begin with. By investing in education, society will slowly but surely begin to see increases in human capital which will translate to improved quality of life. I also realize that it is quite difficult to quantify the social benefits of education, but wouldn't metrics such as life expectancy and income per capita be viable measurements?

Bridget Bartley

This world bank paper provided a lot of interesting topics to think about. There were facts I already knew about. The returns to investment in education being greater to women, to people in low-income countries were things we have already discussed in class. They make sense to me too. What I had while reading and am still having trouble understanding is the fact that private sector workers exhibit higher returns to investment in education than those in the public sector. Maybe I am misinterpreting, but does this also mean that public school teachers and employees may not be receiving as much return on an investment in the schooling that they are in charge of? I have a hard time interpreting exactly what this fact means and would appreciate discussing it more in class. Does this fact lend itself toward greater investment in private education? Yeah, I am just really confusing myself trying to understand.

Other than that, I have a hard time reading this knowing that people in our society today pass legislature that does not support these ideals. With greater economic returns to investment in education for women and low-income communities, why can’t those who are so focused on economic success agree to policies that support such ideals? Or at least, what is their argument against doing so? How new are these statistics? Is it information that has not yet been distributed to the public at large? I am having a hard time understanding this as well.

Savannah Corey

I am fascinated by Tinbergen's study regarding the race between education and technology. In this article, the authors illustrate that "the race reflects, on the one hand, the skill-biasedness of technological progress with its consequences for income inequality and, on the other hand, to the pivotal role of education in mediating this relation," revealing that education is fundamental to decreasing the income inequality gap. Before this article I had not thoughtfully considered how the rate of technological advancement acts as an exogenous factor in the private returns of schooling. Therefore, I think it is imperative that policy makers not only focus on achieving universal primary schooling in lower-income countries, but also to enhance the quality of education in developed countries to maintain pace with the rate of technology advancement. It is mind-boggling that policy makers do not immediately increase investments in the education budget in both low and high-income countries, as the world average private rate of return is 8.8% for an additional year of schooling. While the authors admit “social returns are lower than private because researchers can account for full social costs, but they do not include social benefits,” they also illustrate that “monetizing the value of just one externality of education - reduced mortality - Pradhan et al. (2018) found that the social rate of return to investment in one extra year of schooling in low-income countries is 16%,” so I do not understand why more funds are not allocated to the education sector to close the income inequality gap, if it is known that the social rate of return will exponentially increase. Moreover, the authors detail the concept “selective cost recovery” to direct funds to increasing female enrollment and achieving universal primary schools in low-income countries. As we have discussed, investment in human capital is instrumental to increasing economic productivity and profitability. So, while the social benefits of education are more difficult to quantify than the social costs, the recent evidence that considers metrics such as reduced mortality rates should be highly considered. One question I wish the authors explored is whether high-income countries like the United States should prioritize shrinking the income inequality between high skilled and lower skilled workers domestically or direct more funds to achieving universal primary education in developing countries. It is frustrating that potential higher social costs in the short-term dissuade policy makers from considering the long-term spillover effects of increasing investment in female education and education in developing countries.


The productivity of humans and technology has always been intertwined. However, this paper really highlights that the growth of technology has increased the supply of jobs that require higher education. The fact that the demand for highly skilled labor has grown faster than the supply despite the rapid increase in education across many countries is astonishing to me. However, this is good because the issue of lag when people are performing their own cost benefit analysis of their education is addressed in part. Of course, the specifics of what sectors these jobs are in and what degrees are being acquired may not be well matched as the surplus of lawyers and shortage of health workers demonstrate. However, the trainability of the highly educated still allow them to land jobs that they may not be explicitly qualified for nonetheless.
I appreciate how this paper just came out and stated that education level is not the only, or even the most important, indicator of productivity. I think there is an inherent air of superiority in the world of higher education, where people believe that just because on paper they are “more qualified” for a job (and by that they mean they have a longer resumé), then they are the “best” candidate. This does not only happen between various education levels, but also within one level. The idea that an Ivy Leaguer, who holds the same degree as someone who attends a state school, is somehow a significantly superior candidate. Humans and the institution of education are more complex than that, and some of these “measures of success” are more arbitrary that our society wants to admit.

Didi Pace

This article was a nice summary of many of the topics we have been discussing. Education is a powerful catalyst for development, especially in developing countries. In Blunch's 'health economics in developing countries' class, I did a case study on Sri Lanka. Education is a top priority for the Sri Lankan government. A universal education policy is written in Sri Lanka’s constitution, assuring all persons aged 5 to 16 the right to free education. Since the policy’s adoption in 1948, Sri Lanka has made great strides in the realm of education. Sri Lanka is one of the few developing countries that boasts gender parity in the education sector. The literacy rate in Sri Lanka has reached 92%, which is not only high in comparison to other developing countries, but also to other countries in South Asia. Sri Lanka’s high rate of literacy, in turn, is beneficial for effective understanding of health education. In this manner, more students can be exposed to learning about health risks and the practices of self-care and disease prevention. Like we have been saying in class, there are a myriad of positive spill over effects with these investments. Health and education are mutually reinforcing…investing in education leads to better health outcomes and vice versa, as we learned from Schultz. However, the education system in Sri Lanka is not without problems. Although free, some families (more commonly poor) choose not to send their children to school at all. This is why there must be incentives in place, such as conditional cash transfers, to make the universal education policy effective.

I loved the line in the discussion-- "In the United States the long-term 1966 to 2015 average return on stocks and bonds is 2.4 percent (Damodaran 2016) versus a 10.5 percent overall private return to investment in education in our database for education." Funny how Wall Street investors continues to not understand this.

Sydney Goldstein

This paper was very interesting to read especially in junction with the material I am learning in my economics of education class. Sarah pointed out something that I think is worth discussing more. She said that she is, “shocked that investment in education is not more of a priority—in some low-income countries but especially in the U.S.” To this is would respond that the U.S. has been increasing real spending per pupil in K-12 education since the 1950s. This increased spending would suggest that it is valued, at least to an extent. Something that is interesting to note about this increased spending in the U.S. is that it was not accompanied by higher test scores. Some economist argue that this is because there simply aren’t returns to investment in education in this scenario. This could coincide with this paper’s finding that returns to education are lower in high income countries. It may be the case that because there are diminishing marginal returns, the returns have become so low that they’re immeasurable so increased spending in the U.S. on education has no measurable impact. But, another potential reason that we have seen an increase in spending, but not necessarily test scores is that there has been a demographic change in students. Now there are far more students in the education system who have limited English proficiency as well as more students who require special education. Because these students require more resources they are more expensive to educate so the increase in spending may be necessary to keep test scores the same. Additionally, theorehtical models and intuition suggest that investment in education is important and will lead to gains in human development (as we have discussed in the class regarding Schultz and Human Capital Theory).

Now bringing the conversation out of the context of the U.S. and into that of developing countries, all evidence points to the fact that investment in education is a crucial part to development. Primarily through the improvement of human capital which are inputs to production. This paper discusses how education is generally associated with higher earning due to increased productivity rather than screening, which is not something that surprised me. Furthermore, the gains to education in developing countries are much higher and thus it seems clear that it is imperative to invest in education especially that of women and in primary education for which high returns are seen as well.

Julia Foxen

I found this paper’s distinction between the human capital (productivity) and screening hypotheses particularly interesting. The human capital hypothesis maintains that schooling imparts skills that enhance productivity, thus an increase in earnings is due to increased productivity brought about by investments in education. The screening hypothesis states that “employers select workers with higher qualifications to reduce their risk of hiring someone with a lower capacity to learn”, thus higher earnings may not be due to productivity alone (4). The screening hypothesis reminds me greatly of the concept of signalling discussed in Economics 100 in which an individual is viewed as more credible than another simply because of some piece of information they have that the other lacks, such as a diploma. Because I remember discussing this theory in class, before reading this article, I would have thought it to be highly relevant in helping to increase rates of returns in education. However, the two studies explained in the analysis of these hypotheses found little to no evidence for the screening hypothesis, indicating that higher earnings are more due to productivity than to screening (4). While this analysis is intriguing, I am left wondering if the two hypotheses are more intertwined than the author lets on, and if there is more endogeneity present than the studies revealed.
The author’s discussion of women also reminded me of the piece we read by Esther Duflo earlier in the term. The author finds that female education exceeds that of males by about two percentage points in regard to their private return to education (10). This finding again emphasizes that educating women should be a development priority. It is both intrinsically good for the wellbeing of women, especially in developing countries where there are more biases and societal confines working against them, and also good for the broader economy since investments in women’s education provides greater returns than men.

Adelaide Burton

This paper proposes many interesting studies on the private and social returns to education, but no one answer is comprehensive or satisfactory. The conclusion of the paper briefly mentions this, but I find it hard to view any measure of return on investment from studies that do not account for inputs like discrimination, quality of economy, industry of work, and other issues that differentiate the quality and quantity of education and income. Regardless of how daunting a task that might seem, the general trends in return on education seem to hold throughout many different surveys, and these trends are important for forming economic policy. Personal benefit of a higher income might encourage students to stay in school longer or parents to encourage their students to attend. Social benefit is much more difficult to quantify, as it’s more complex than just income. Health, happiness, and non-monetized productivity are difficult to put a number on, and therefore there is ambiguity in the number for social benefit -- which is also the number that would likely lead to policy changes and increase in public subsidization of education. It was interesting to read the progress and development of this study as described in the article, but it’s clear that there are many additional avenues to explore.

Katie Timmerman

Truthfully, this paper came across as rather vague and unclear to me. The authors seemed to rush through the relationships they were talking about rather than delve into them a little deeper, which I would have appreciated. The syntax and the format of the paper were distracting and I didn't easily move from one subject to the next. I also was confused about the structure of the social and private returns. It was crazy to learn that the returns to investment in human capital are almost five times as large as the returns to stocks and bonds, and this paper overall provided evidence and incentive for investing in education. It was also interesting to more tangibly grasp the different theories regarding the value of education- i.e. the human capital and the screening hypotheses. Like the authors say, I wouldn't expect screening to play a large role but it does seem plausible that it plays some. It would depend on the job, but of course I think the highest returns obviously come to the most productive human capital.

Ben Graham

In this report by the World Bank, the authors George Psacharopoulos and Harry Antony Patrinos examine economic development, specifically focusing on the returns to investment in education. To begin their discussion of the topic, they refute the screening hypothesis, or the idea that education mainly serves as a signal to employers that a prospective employee has a high capacity to learn. In this sense, education is not primarily a means of enhancing productivity. After disproving this claim and upholding the productivity-inspiring aspect of education, the authors look at two different methods for measuring the rates of return on education: the Mincerian (accounts for only private returns) and full-discount (accounts for private and social returns) method. In their econometric analysis, they obtain several significant results, such as that investment in education has a higher rate of return for women, those in the private rather than public sector, and those in low income countries. They also determined that the private returns of education have increased over time.

Overall, I found the paper to be particularly interesting, given my limited familiarity with the economic discussion of investment in human capital. After gaining an initial understanding of the topic through the textbook reading, it was nice to explore it further by reading a study related to the progression of and recent trends in investment in education. Given my interest in the mentioned case study of Argentina, I would enjoy exploring analyses of specific countries. One that I believe would be specifically interesting is South Africa. As it has one of the highest Gini coefficients in the world, it is a highly unequal society, with people of both extreme wealth and immense poverty. Therefore, there are accordingly sharp differences in education and the degree of investment in it across the nation. I believe that it would be of particular interest to explore said differences and gain a more comprehensive understanding of the phenomenon on a more micro level.

Austin Lee

The paper talks about the difference between human capital and the screening hypotheses and their returns to education. With the advancement in technology, many recruiting officers receive hundreds of applications which would take them forever to go through one by one. Many companies now have the technology to pinpoint keywords within a resume to sort out the candidates they deem “qualified” into one pile, and the non-qualified into another. It seems that because higher educational attainment has increased in America, the screening hypothesis seems more viable than it did just a couple of decades ago. The recruiters are looking for certain qualifications for applicants before they are even allowed to walk into the door for an interview. This naturally affects those applicants who may not have attended as notable of a college than the applicant sitting on their left or have not received higher education. However, this hypothesis does not touch on the intrinsic human capital (productivity) of the individual which the paper mentions is key for public policy.

Jack Parham

In reading this paper I continually thought about the ways in which the United States fails to invest in the education of its citizens. The more we continue to read about the returns to education it becomes very clear that we are underinvesting in our youth. With an incredibly important election coming up, I have been looking at how different candidates, both state and presidential, think about development in the United States. In my research before casting my vote, I found out that John Hickenlooper, a democrat and former mayor and governor of Colorado who is running for Senate has carefully thought out this exact question regarding education. His plan is to support the Child Care for Working Families act that would work to provide universal access to preschool for 3 and 4 year olds in the state of Colorado. After reading continually about the lasting effects and high returns to investment in education, I wonder just how lucrative a universal preschool could be for a state. Maybe this is a policy that bears a much lower cost but has equally as high returns as far as social benefits. Additionally, when taking into consideration the screening hypotheses, as we continue to make education more universal, companies will not as easily be able to distinguish candidates without looking directly into who they are as a person and their genuine abilities as a potential employee.


This article reaffirmed the value of education as an important aspect of economic development and a high return investment that often does not receive the adequate amount of investment allocations. Given our past readings and class discussions, I was not surprised to find that the highest rates of return to education are found in low and middle income countries and that the private returns to female education are greater than that of males. The part of the article that I found most concerning and at the same time interesting was the discussion of how private and social rates of return are estimated. It seems only because the social benefits of education are estimated using directly observable monetary benefits, failing to account for the value of outcomes such as lives saved or decreased crime rates, that the reported social rates of return to education lag behind private rates. I understand it is most likely very difficult to estimate the monetary value of “unobservable” benefits and to also decide what variables should be included in the social benefit calculation, but it would be a disservice to policymakers and society as a whole to not improve these estimates. Private and social rates of return can influence and guide public policy concerning access to and the quality of public education. If the social return to education is being undervalued, then public policies may be led in a direction that is not truly the most beneficial for society.


“Returns to Investment in Education: A Decennial Review of the Global Literature” by George Psacharopoulos and Harry Antony Patrinos delve into the direct and indirect benefits of human capital investment. Overall, public and private spheres experienced highest reward when having an established primary education. In the final discussion, the authors suggested a global shift toward universal primary education. This policy suggestion was originally the second goal of the Millenium Development Goals and falls under the fourth SDG of ‘Quality Education’. It is for the global public’s best interest that all children, regardless of gender, receive basic schooling. Next, Psacharopoulos and Patrinos mention, “Those who are forced to remain in school because of their birth date and the school attendance law receive the same rate of return to education as those who voluntarily continue schooling,” this statement seems to discount the value and key role ‘freedom of choice’ has on productivity. Then, when reading the discussion of figure 5, “supply of educated labor increases, so does the demand for higher skills,” was an explanation for the slow rate of return in response to higher education. This is perhaps why it is harder to convince private households to make the personal investment and where key state intervention would catapult general interest in pursuing longer enrollment rates. Finally, Psacharopoulos and Patrinos were sure to include that, here is no substitute for a country specific study,” this is essential in any discussion of development economics so that we may avoid broad, overarching generalizations within very variant regions. The annexes to follow the citations prove such differences country-to-country.

Joey Dickinson

This paper reaffirmed what we've been talking about for the last couple of classes; human capital is perhaps the most critical piece to economic development. The returns to education are so incredibly high, especially for those countries which are further behind in development and don't have a lot of human capital currently. However, it is impossible for us to get to an appropriate equilibrium level of education if we are unable to correctly estimate the social benefit curve. How can we better estimate this curve? As Graham pointed out, it seems a disservice to developing countries who are most in need of human capital development through education to not be able to appropriately approximate this curve. Or, to take it a step further, I think we might even have a moral obligation to do our best to estimate this curve, not just for the sake of academia, but in order to persuade policymakers to provide valuable human capital that can tremendously better countless lives, many of which are experiencing poverty and underdevelopment.

Jackie Tamez

As we’ve been discussing elaborately in class, the reading emphasizes that investment on human capital multiplies overall private returns and social benefits. In fact, from 1966 to 2015, average return in the United States increased from 2.4% to 10.5% due to higher investment. There are multiple positive externalities to investing in education and health, such as reduced mortality and higher incomes, that countries should aim to promote. I found it interesting to read about how different regions across the globe see varying impact. For example, private and social returns for low income countries in Sub-Saharan Africa and Latin America are particularly high due to the scarcity of human capital that affects years of schooling and the labor force and given the substantial lagging. Corruption, natural resources and poor academic performance are some of the hypotheses for lower returns in the Middle East and North Africa. The subsidization of education also plays a significant role in reaching higher returns. Although primary education is generally provided for free, the next step towards economic development would be providing more scholarships or financial aid making higher education more accessible. It is surprising to me that we have not reached that point yet although we have plenty of research supporting this fiscal policy. In fact, people continue to neglect the push for legislation that would help make education or health care universal. Another interesting point was that technology has been so incorporated in society that lack of technical skills or access to equipment such as laptops adversely contributes to inequality. As the demand for higher skills continues to increase, educational advancements are simply not enough for the competitive labor market. The research concludes that technology is winning the race against education because it has prevented the rates of return on investments that would be expected.


Psacharopoulos and Patrinos's paper emphasizes the importance of investing in education to improve the overall life-qualities and capabilities of human capital. Poorer people get more value/better "returns" from investing in education, and this provides poor countries with an important direction they should take to escape poverty. However, the two authors fail to mention some obstacles countries might face while trying to achieve this goal. For example, in a country like Cambodia where about 40% of the population farms, education is not as prioritized and valued as it is in a wealthy country like the US or South Korea. Many of the people I interacted with shared these views: if they were just going to go back to their families' land to help out with farming, what was the point in pursuing a higher level of education? While 40% is a much better number than 80%, which Cambodia had in 1993, this view is a challenge that Cambodia will have to solve if it wants to advance on the world stage (of course, there are many factors that need to be taken into account, such as the fact that agriculture accounts for 22% of Cambodia's GDP so it is inevitable that several people will have this view). My point is, Psacharopoulos's and Patrinos's paper presents ideas that are progressive and critical in development economics, but it can be difficult to implement/take a long time to implement in some countries.

Frances McIntosh

This paper delves into the discussion of both the private and public returns on education investments. We have mentioned in class that the returns of education for females exceed that of males. Something interesting in the paper that I don’t think we have mentioned before is that the gap in returns between males and females is widening. I wonder why the gap is increasing? I also found it interesting that returns to the academic secondary school track are higher than the vocational track. A lot of people from my hometown do not attend a four-year college and attend vocational school before entering the work force. Those people I know who have chosen this route seem to be doing very well, and sometimes better than people I know who are recent college graduates. I would expect the vocational track to exceed the returns of just a secondary/high schooI education or at least have the returns between the two to be similar. Today it is also a popular topic of conversation whether or not attending college is worth it, in the sense that college is very expensive and many people end up with large sums of student loans once they graduate. I am very lucky and privileged to have the opportunity to attend W&L, and sometimes I think college students forget how fortunate they are. I feel that in the US there is a stigma about people who do not attend college, that people who do not attend college are not smart and will be less successful. This stigma does however vary across different parts the US. One part of the paper I found especially interesting is the authors' explanation of productivity. You do not acquire a job when you are more educated because more education makes you more productive, rather more education signals to an employer that you are more likely to be productive. I found this distinction very interesting. The stigma I mentioned I think follows the thought process that education inherently makes you more productive, which is not the case. Overall education is very important and the paper points out that primary school provides the best returns on education. To increase both social and private benefits of education investments, I think the focus should be placed on primary and secondary schooling.

Eric Schleicher

It is difficult to read a paper about the clear importance of investments in education when we live in a society that is so clearly underinvesting in the schooling of its youth, with disproportionate impacts being felt by minority and poorer individuals. All of these papers that we read tend to have an importance beyond academic and intellectual consideration. We can connect the research to events actually happening in our lives, and I think it is no more evident than during this crisis. We are witnessing a vast underinvestment in education in a time of crisis. Prior to our current situation in this pandemic, American schools were already struggling to collect satisfactory resources and foster opportunities that would allow students to excel. Now, not only do we have a great need to provide proper education to our youth, but we have a responsibility to provide schools with the funding to be able to conduct this education safely. It pains me to think of what it must be like to be a kid or the parent of a kid who sees their child separated from their friends and attempting to attain their education online. It is even difficult now as a college student, and although Psacharopoulos and Patrinos provide historical research that does not support the screening hypothesis, I feel that myself and many of my peers are simply going through the motions to get a college degree as that has been touted as a path of upward mobility. In reality, I believe there is greater alignment with the productivity hypothesis, and therefore it is important, now more than ever, that are youth are provided not just with satisfactory resources, but with excellent resources and education that will allow them to apply their skills and unique knowledge to a world that is evolving more rapidly than ever before.

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