Economics of Education

                         Economics of Education 
                    By Ajith.K.S.MA(Economics )
Education economics or the economics of education is the study of economic issues relating to education, including the demand for education, the financing and provision of education, and the comparative efficiency of various educational programs and policies. From early works on the relationship between schooling and labor market outcomes for individuals, the field of the economics of education has grown rapidly to cover virtually all areas with linkages to education. 

Education as an investment

Economics distinguishes in addition to physical capital another form of capital that is no less critical as a means of production – human capital. With investments in human capital, such as education, three major economic effects can be expected:

• increased expenses as the accumulation of human capital requires investments just as physical capital does,
• increased productivity as people gain characteristics that enable them to produce more output and hence
• return on investment in the form of higher incomes.

• Financing and provision

  In most countries school education is predominantly financed and provided by governments. Public funding and provision also plays a major role in higher education. Although there is wide agreement on the principle that education, at least at school level, should be financed mainly by governments, there is considerable debate over the desirable extent of public provision of education. Supporters of public education argue that universal public provision promotes equality of opportunity and social cohesion. Opponents of public provision advocate alternatives such as vouchers.

  Pre-primary education financing

  Compared to other areas of basic education, globally comparable data on pre-primary education financing remain scarce. While much of existing non-formal and private programmes may not be fully accounted for, it can be deduced from the level of provision that pre-primary financing remains inadequate, especially when considered against expected benefits. Globally, pre-primary education accounts for the lowest proportion of the total public expenditure on education, in spite of the much-documented positive impact of quality early childhood care and education on later learning and other social outcomes.