Elgar original reference
Edited by Geraint Johnes and Jill Johnes
The modern analysis of the economics of education had its birth with Theodore Schultz’s address to the American Economic Association in December 1960. That address introduced to a wide audience within the economics profession the notion that education can be regarded as an investment in human capital, an investment that is analogous to investments in physical capital. Individuals decide to invest in their own education, at the margin, just as ﬁrms decide to invest in new machinery; the investment in each case entails current costs, and yields future beneﬁts; and an internal rate of return to the investment can in each case be calculated. The study of the economics of education has expanded considerably in scope over the last four and a half decades – as is evidenced by the wide range of material in this volume. But the key insights of human capital theory remain central to any analysis of the demand for education, and it is therefore appropriate that this is where the volume should begin. Psacharopoulos and Patrinos outline the basics of the human capital model, emphasizing the role that education has to play in raising individuals’ productivity. They also provide empirical estimates of the rate of return to education in a variety of countries. Estimates such as these have been particularly inﬂuential in shaping the educational policies of international organizations such as the World Bank, informing in particular the policy of loans to support education in developing countries and the goal of universal primary education....