ECONOMICS OF EDUCATION: What are the indirect contributions of education to economic growth?

CHAPTER THREE

EDUCATION AND DEVELOPMENT

3a iii). Explain the indirect contribution of education to economic growth

INDIRECT CONTRIBUTIONS OF EDUCATION TO DEVELOPMENT

Education also has important effects on social aspects of the life of the people but which cannot be measured using economic tools of analysis. Apart from the direct economic benefits accruing to the individual, the society also derives some benefits from having an educated citizenry. These benefits are variously referred to as externalities/spill-over benefits/neighborhood effects. Some of these spillover benefits include:

  1. Reduced need for other services, e.g. increased investment in education will tend to reduce the necessity of placing more public revenue into health, welfare, and penal system. An increment in education reduces government expenditures on crime prevention, public health, and medical care.
  2. Social consciousness & Inter-generational transfers. Education benefits many people other than the student, including the student’s children, who receive positive intergenerational transfers of knowledge and neighbors who are affected by favorable social values developed by schooling. Education also fosters harmonious living.
  3. Reduction in fertility: Education itself acts as a natural contraceptive by delaying childbearing and marriage. Education also enhances the use of contraceptives by women. 

    Education enhances the use of contraceptives by women.
  4. Participation in labor force: Educated workers are less susceptible to set time from unemployment and illness and are usually characterized by higher aspirations.
  5. Allocative ability: Education enables workers to assess their own talents; to achieve greater skills; and to be more receptive to new technologies, new products, and new ideas.Image result for Allocative ability:
  6. Job satisfaction: The educated may have greater job satisfaction because they tend to acquire jobs with greater psychic rewards.

    Job satisfaction is an indirect contribution of education to economic growth

 

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