Everybody is well aware of the importance of education. It starts with acquiring basic general knowledge and than depending on further education it narrows down to educating in more specific areas of a student’s choice. Besides having personal benefits for the student education also has a strong economic and social impact. Over the past 10 to 15 years there has been a resurgence of interest among economists in education and human capital. Considerable progress has been made on several fronts. Most research on the relationship between human capital formation and individual and social outcomes uses relatively crude measures of human capital such as educational attainment and years of work experience. However, education and experience are inputs into the production of human capital rather than outputs such as skills, competencies and knowledge.
Benefits of education:
Human capital theory emphasizes the role of education as enhancing the productive capacities of individuals. A contrasting view of education, where it has no effect on
individual productivity, is the signaling/screening model. According to this theory, education may act as a signal of the productive capacity of individuals. Central to this
theory is the importance of imperfect information. In their hiring decisions, employers are imperfectly informed about the capabilities of potential employees. They therefore may use education as a signal of a new hire’s future productivity. If employers’ beliefs are subsequently confirmed by actual experience (that is, if more educated workers turn out to be more productive), employers will continue to use education as a signal. Employers will thus offer higher wages to more educated workers. Facing a positive relationship between education (which is costly to acquire) and wages, individuals will have an incentive to invest in education.[1]
One important factor in the creation of inequality is variation in individuals’ access to education. Education, especially in an area where there is a high demand for workers, creates high wages for those with this education. As a result, those who are unable to afford an education, or choose not to pursue optional education, generally receive much lower wages. During the mass high school education movement from 1910–1940, there was an increase in skilled workers which led to a decrease in the price of skilled labor. High school education during the period was designed to equip students with necessary skill sets to be able to perform at work. In fact, it differs from the present high school education, which is regarded as a stepping stone to acquire college and advanced degrees. This decrease in wages caused a period of compression and decreased inequality between skilled and unskilled workers.[2]
The contribution of primary schooling to economic development is greater than has conventionally been percieved. This review of recent research shows that primary schooling increases labour productivity in both urban and rural sectors, and that the economic returns to such investment are typically high. In addition, it reduces fertility, improves health and nutrition, and promotes other behavioural and attitudinal changes which are helpful to economic development. Investment strategies which give primary schooling an important place would be more conducive of growth-with-equity than many alternatives. Priorities for government and donor policies are indicated, as are those for future research.[3]
This paper surveys the empirical literature on the growth effects of education and social capital. The main focus is on the cross-country evidence for the OECD countries, but the paper also briefly reviews evidence from labour economics, to clarify where empirical work on education using macro data may be relatively useful. It is argued that on balance, the recent cross-country evidence points to productivity benefits ofeducation that are at least as large as those identified by labour economists. The paper also discusses the implications of this finding. Finally, the paper reviews the emerging literature on the benefits of socialcapital. Since this literature is still in its early days, policy conclusions are accordingly harder to find.[4]
Besides obtaining education in schools and at the universities one can always get some additional education by attending various courses or learn something new regardless of what their main vocation is. This is always seen as a plus with potentional employers and is always welcomed by them. [5]
Conclusion:
The significance on education is immense not only on personal level but on a larger scale as well. An educated worker who knows their job well is certainly a valuable asset to every company and that way to an economy and a society of a country.
References:
[1] The Impact of Education on Economic and Social Outcomes: An Overview of Recent
Advances in Economics by: W. Craig Riddell
[2] http://en.wikipedia.org/wiki/Economic_inequality#Education
[3] The impact of primary schooling on economic development: a review of the evidence by: Christopher Colclough
[4] Growth Effects of Education and Social Capital in the OECD Countries by:
Jonathan R.W. Temple
[5] http://www.comparecourses.com.au/
