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Demand for Education

Опубликовано на портале: 31-12-2003
Amsterdam: North-Holland, 1987, cерия "Handbooks in Economics", vol. 1
The human capital "revolution" of the 1960s and 1970s turned the previously peripheral topic of demand for education into a major area of research for labor economists. Analysis has focused on a variety of questions relating to the role of education in an economy, individual decision-making with respect to demand for education, and social provision of education. At the societal level, the important questions are: What is the contribution of educated labor to national output? What is the substitutability between educated labor and other inputs in production? To what extent does demand for educated labor change with economic development and growth? And, on the wage side: How responsive are educational wage differentials to market conditions? At the level of individual decision-makers the questions are: How well does the economic model of investment in human capital explain individual demands for education and thus the supply of educated labor? How elastic are the supplies of workers to various educational categories? With respect to earnings, we want to know the fraction of the variance in earnings that can be explained by differences in education. Because of the significant public role in education markets, another important question is: What determines public funding for education?

In this chapter I examine the theoretical and empirical findings from the past two or so decades of work on these issues. The chapter shows, I believe, that we have made considerable progress along the paths developed in the late 1950s and early 1960s by T. W. Schultz, G. Becker and others on the economic analysis of demand for education.1 While there are exceptions, the past two decades' work supports the general proposition that economic analysis of rational behavior under specified market and informational conditions goes a long way to understanding the interplay between education and the economy.

The evidence on which this conclusion is based, and the specific findings on the social, individual, market, and public finance questions of concern, are presented in the remainder of this chapter. I begin with the demand for education by the society as a whole, then turn to individual decision-making and wage determination, and conclude with the issues relating to public funding.

Ch. 6 in Handbook of Labor Economics

"Demand for Education"


1. Introduction

2. Societal demand for education: Productivity

3. Sectoral shifts and demand for education

4. Substitutability between educated labor and other inputs

5. Individual decision-making: Demand for education

6. Salary determination

7. Probing the education-earnings link

8. Changes over time and market dynamics

9. Public finance of education

10. Conclusion

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