Education and Development Measuring the Social Benefits

This book develops a new approach to measuring the total returns to human resource development through investment in education. Drawing on microanalytic foundations, it uses regional and worldwide data to estimate the net marginal contributions of education and new knowledge both to economicgrowth and to wider effects on democratization, human rights, political stability, health, net population growth rates, reduction of poverty, inequality in income distribution, crime, drug use, and the environment. The total impact of education policy changes on endogenous development is thenestimated using an interactive model. This new approach is important to industrialized and developing countries alike. The diffusion of knowledge and the adaptation of new techniques has been identified as crucial to the growth process in the new endogenmous growth models, and is of increasing strategic importance in currentknowledge-based globalizing economies. Similarly, the non-monetary returns from education are important in improving human welfare. Measurement of these non-market returns is a crucial but much neglected subject. It has proved frustrating, and existing microanalytic measures have proved piecemeal. The new approach developed here offerssome comprehensive estimates and simulation techniques for finding more cost-effective policies, and also suggests new hypotheses for further microanalytic testing.

Walter W. McMahon has been Professor of Economics with a joint appointment as Professor of Education at the University of Illinois at Urbana-Champaign since 1972, specializing in the economics of education and human capital, and in macroeconomic theory and analysis. He has worked in many developing countries, including acting as Chief Economist on the 25 Year Plan for Education in Indonesia, and conducting education sector assessments for the governments of Nepal, Pakistan, Indonesia, and Kuwait.