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Affordability&Access;Costing,Pricing&Accountability

Course Goals:1) Apply theoretical and empirical methods of economics to education policy.Economics is a powerful framework for thinking about education policy. Economicsfocuses us on the incentives created by a policy, allowing us to predict its intended andunintended consequences.2) Distinguish good empirical research from bad.There are thousands of empirical education studies. This course helps you separate thewheat from the chaff by teaching you to read closely and critically. We will discuss thekey challenges in education research and learn the best-practice methods that overcomethem.Economics of Education

Education economists analyze both what determines or creates education and what impact education has on individuals

and the societies and economies in which they live. Historically at the World Bank a great deal of emphasis has been

placed on determining outcomes to educational investment and the creation of human capital. The primary mission of the

economics of education group is to identify opportunities for improved efficiency, equity, and quality of education and

promote effective education reform processes; to help improve, among both World Bank staff and clients, knowledge of

what drives education outcomes and results; to better understanding how to strengthen the links of education systems

with the labor market; and to build and support a network of education economists and build bridges to all those who are

interested in their work.

The World Bank addresses key themes of Economics of Education through work in these five topic areas:

Why is economic analysis important?

All countries face the problem of allocating limited resources such as capital, skilled and unskilled labor, land and othernatural resources to a variety of different uses such as production of consumer goods, investment in industry,infrastructure, education, health etc. with an aim to reach a more fundemantal goal of reducing poverty, acceleratingeconomic growth and/or reducing income inequalities. Given limited resources, choices have to be made betweenalternative uses of these resources such that the benefit to the economy and society is as large as possible. Therefore,all World Bank projects must meet certain selection criteria, including economic justification.

in this regard the education sector specifically seeks to answer the following questions in a country's public expenditureanalysis:

How much is spent on education and what is the share of the government's expenditure?

How do governments finance the education sector and what do they finance?

Is there equitable distribution of the public resources?

Is the public getting its money's worth?

Is the spending adequate and sustainable?

Public-Private Partnerships in Education

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What is school-based economic management?\

Goals

Investment in Education

COST ANALYSIS IN EDUCATION

DemandandSupplyofSchooling-AccesstoEducation

Economic and Social Externalities in Education

The course aims to provide students with a perspective on the pressing issues

concerning the education sector in countries -theoretical, methodological and

applied- and to bring them towards the research frontiers in certain selected

topics. It will also try to shed light on the evolution of economics of education

as a sub field and its contribution particularly in developing economies.

Education is central to development and the course will focus on emphasizing

this relationship. Broadly, it will assert the importance of education as an

investment, adding to the stock of human capital which becomes an essential

primoever for economic growth. It will then introduce students to the various

methods used in analyzing both the inputs and outputs that go into the

provision of good quality education services

Education economics

From Wikipedia, the free encyclopedia

Not to be confused with Economics education.

Economics

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Education economics or the economics of education is the study ofeconomic issues relating to education,

including the demand for education and the financing and provision of education.

Contents

[hide]

1 Demand for education

2 Financing and provision

3 Education production function

4 Marxist critique of education under capitalism

5 See also

6 Notes

7 Referencecs

8 External links

[edit]Demand for education

The dominant model of the demand for education is based on human capital theory. The central idea is that

undertaking education is investment in the acquisition of skills and knowledge which will increase earnings, or

provide longterm benefits such as an appreciation of literature (sometimes referred to as cultural capital).[1] An

increase in human capital can follow technological progress as knowledgeable employees are in demand due to the

need for their skills, whether it be in understanding the production process or in operating machines. Studies from

1958 attempted to calculate the returns from additional schooling (the percent increase in income acquired through

an additional year of schooling). Later results attempted to allow for different returns across persons or by level of

education.[2]

Statistics have shown that countries with high enrollment/graduation rates have grown faster than countries without

The United States has been the world leader in educational advances, beginning with the high school

movement (19101950). There also seems to be a correlation between gender differences in education with the

level of growth; more development is observed in countries which have an equal distribution of the percentage of

women versus men who graduated from high school. When looking at correlations in the data, education seems to

generate economic growth; however, it could be that we have this causality relationship backwards. For example, if

education is seen as a luxury good, it may be that richer households are seeking out educational attainment as a

symbol of status, rather than the relationship of education leading to wealth.

Educational advance is not the only variable for economic growth, though, as it only explains about 14% of the

average annual increase in labor productivity over the period 1915-2005. From lack of a more significant correlation

between formal educational achievement and productivity growth, some economists see reason to believe that in

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todays world many skills and capabilities come by way of learning outside of tradition education, or outside of

schooling altogether.[3]

An alternative model of the demand for education, commonly referred to as screening, is based on the economic

theory of signalling. The central idea is that the successful completion of education is a signal of ability.[4]

[edit]Financing and provision

In most countries school education is predominantly financed and provided by governments. Public funding and

provision also plays a major role in higher education. Although there is wide agreement on the principle that

education, at least at school level, should be financed mainly by governments, there is considerable debate over

the desirable extent of public provision of education. Supporters ofpublic education argue that universal public

provision promotes equality of opportunity and social cohesion. Opponents of public provision advocate alternatives

such as vouchers.[5] [6] [7]

[edit]Education production function

An education production function is an application of the economic concept of a production function to the field

ofeducation. It relates various inputs affecting a students learning (schools, families, peers, neighborhoods, etc.) to

measured outputs including subsequent labor market success, college attendance, graduation rates, and, most

frequently, standardized test scores. The original study that prompted interest in the idea of education production

functions was by a sociologist, James S. Coleman. The Coleman Report, published in 1966, concluded that the

marginal effect of various school inputs on student achievement was small compared to the impact of families and

friends. [8]

The report launched a large number of successive studies, increasingly involving economists, that provided

inconsistent results about the impact of school resources on student performance.[9] [10] The interpretation of the

various studies has been very controversial, in part because the findings have been directly entered into policy

debates. Two separate lines of study have been particularly widely debated. The overall question of whether added

funds to schools are likely to produce higher achievement (the money doesnt matter debate) has entered into

legislative debates and court consideration of school finance systems. [11] [12] [13] Additionally, policy discussions about

class size reduction heightened academic study of the relationship of class size and achievement.[14] [15]

[edit]Marxist critique of education under capitalism

Although Marx and Engels did not write widely about education the social functions of education, their concepts and

methods are theorized and criticized by the infuence of Marx as education being used in reproduction of capitalist

societies. Marx and Engels approached scholarship as "revolutionary scholarship" where education should serve as

a propaganda for the struggle of the working class. [16] The classical Marxian paradigm sees education as serving

the interest of capital and is seeking alternative modes of education that would prepare students and citizens for

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more progressive socialist mode of social organizations. Marx and Engels understood education and free time as

essential to developing free individuals and creating many-sided human beings, thus for them education should

become a more essential part of the life of people unlike capitalist society which is organized mainly around work

and the production of commodities.[16]

ECONOMICS OF EDUCATION INTRODUCTIONJ O HN VAIZEYT h e rise in interest in the economics of education whi ch has taken placein the last few years is d ue to a concatenation of several forces. O n e isthe rising cost of education itself. It has be en s h o wn that education atearly stages of e conomic deve lopment takes be twe en i a nd 2 per centof the gross national product. In advanced economies it n o w takes atleast 4 , a nd sometimes 5 or 6 per cent. Projections for future expendituresuggest that the proportion will b e c o me higher. T h e reasons for this arenot far to seek.1

A s economies g r ow richer there is a switch a w a y from primary industryto secondary industry, a nd then from secondary industry to the servicetrades. A s individuals b e c o me richer the proportion of their i n c o me devotedto food a nd other basic necessities drops. T h e a m o u n t that they spend onhealth care, transport, holidaysand educationrises. N ot only this,but increasingly the provision of skills for the e c o n o my at all levels b e c o m esm o re dependent u p on formal arrangements for education a nd training.Doctors in the nineteenth century learnt their trade largely by apprenticeship. At that time therequirements for medical registration we re formalized, a nd the mo u n t i ng knowl edge of thecauses of sickness a nd concerningthe fundamental sciences lying behind the functioning of the h u m a n b o dy

led to the incorporation into the medical curriculum of a great deal wh i chc an only be imparted by formal education. T h e s a me is true of a host ofother professions a nd occupations from dentistry to architecture.2T h e accumulation of knowl edge itself, especially of the physical world,has be en the basis of the technological transformation of the world e c o n o m y.T h e accumulation of knowl edge a nd its transmission to n e w generationsrepresents an increasingly important part of e conomic activity.For these reasons alone, therefore, as a nation grows richer it tends toincrease m o re than proportionately its expenditure on education. Butthere are also arguments for m o r e educational expenditure springing

1. I have reviewed this evidence in The Economics of Education, 1962; see alsoFriedrich Edding, Internationale Tendenzen in der Entwicklung der Ausgaben frSchulen und Hochschulen, Kiel, 1958.2 See Jean Floud, A . H . Halsey and C . Arnold Anderson (eds.), Education, Economyand Society, Glencoe, 1961.619 I N T E R N A T I O N A L S O C I A L S C I E N C E J O U R N A Lfrom concepts of justice a nd h u m a n decency; the a r g ume n t, for instance,that underprivileged groups of the populationworking people, girls,

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racial minoritiesshould have access to educational opportunity in thes a me degree as their m o re fortunate contemporaries. T h e aspiration ford emo c r a cy a nd equality expresses itself largely in a desire for education.1Another force m a k i ng for interest in the economics of education has

b e en the growing concern of economists with problems of economic growth.This subject, a m o n g We s t e rn economists at least, h ad be en largely neglectedduring the years of ma ss u n e m p l o y m e nt before the second world w a r.Immediately after the second world w a r, h owe v e r, there w as a surge ofinterest in the subject. Because of the relationship in Keynesian economicsbe twe en the m o v e m e n ts of gross investment a nd gross national productthe preoccupation of growth economists has be en with the extent of investm e n t in physical capitalT h e re has be en a deve lopment of techniques,such as capital output ratios, designed to s h ow h o w m u c h extra outputcould be expected from any given increase in the proportion of grossnational product devoted to physical investment.

2T h e substantial truth of this teaching about e conomic growth cannotbe denied. Nevertheless, it has b e en k n o w n for m a n y years that it is notthe whole truth, a nd m o re a nd m o re information has be en accumulatedto suggest that the significant variables m a y well lie outside the physicalplantthe factories a nd ma chine rywhi ch is erected in an e c o n o m y.T h e re has be en evidence, for e x amp l e, that countries like N o r w a y withhigh rates of physical investment h a ve g r o wn no faster than those withcomparatively l ow rates. T h e re has been evidence that countries w h i chhave increased their proportion of physical investment over a period of afew years have not substantially increased their rate of e conomic growth.Increasingly specialists in the economics of growth, like Professor W . ArthurLewi s, have suggested that w h at is perhaps m o st significant is the wh o lenexus of social attitudes to growth wh i ch underlie the e conomic processitself.3These attitudes change through time in both favourable a nd perversew a y s. It is obvious that education c an reinforce both tendencies. O n theo ne h a nd m u c h education is concerned with handing on the beliefs a ndvalues of society, that is, with preserving a nd not with modifying its culture.If the process of g r owth is liable fundamentally to break u p the f r ameworkof any society (and that is very probable), then it will run directly counterto the aims of the existing education system. This has certainly be en thecase with almost all forms of traditional religious education, certainlythose wh i ch we re established before m o d e rn forms of capitalist social a ndeconomic organization b e c a me d omi n a n t. O n the other h a n d, an educationsystem or curriculum wh i ch is based u p on the findings of m o d e rn sciencei. See Seymour Harris (ed.), Higher Education in the United States, N e w York, 1961.2. See, for example, F. M . Meier and R . E . Baldwin, Economic Development: Theory,History, Policy, N e w York, 1957.

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3. W . Arthur Lewis, Theory of Economic Growth, London, 1955.620 E C O N O M I C S OF E D U C A T I O Na nd psychology will be concernedalmost by definitionwith the processof c h a n g e. It will p r omo te a nd accelerate it, not necessarily restrictively:evidence has s h o wn that such a system could also be used to diminish the

heart-ache a nd the h u m a n cost of a process of transition from a stable butstagnant to a stable but growing society.T h u s , in these a nd other w a y s, the a r g u m e nt has developed abouteducation in particular, a nd social expenditure in general, that outlays onproductive investment are not in themselves likely to be successful unlessthey are supported by a substantial expenditure on the provision of socialcapitalon the infra-structure of a developing society. B ut w h at is thenature of 'social' capital ; h o w does it differ from 'ordinary' investment?1At its m o st material, this social capital consists of things such as roadsa nd docks w h i ch yield n o , or very little, direct return to their builders,

w h i ch are constructed by governments or other public agencies, a nd areessential auxiliaries to productive investment in factoriesin this case fortransportation purposes. At its least material, social investment is concernedwith the i m p r o v e m e nt of the health a nd welfare of the people. T h e se aredesirable ends in themselves, but because without such investment theprocess of g r owth will be held ba ck, it is legitimate to class this as productiverather than unproductive expenditure. T h e spread of malaria in Italy,for e x amp l e, is frequently given as o ne of the reasons for the b r e a k d o wnof the R o m a n E m p i r e. T h e l ow productivity of m a n y workers in tropicalareas is directly attributable to their poor physical state. Insufficientm e a n s of education is another direct cause. W i t h o ut s o me system of m o d e rneducation an advanc ed e c o n o my w o u ld not w o r k, because it dependson general a nd specific skills w h i ch education alone is able todispense.Another force wh i ch has b e en m a k i ng for the growing interest in theeconomics of education has therefore b e en the shortages of skills w h i chappear to h a ve held ba ck e conomic g r owt h. This aspect of the subjectc a m e to the fore mainly in m o d e rn fully emp l o y ed economies. In theU . S . S . R . , the Uni t ed States a nd We s t e rn E u r o p e, it has b e en often s h o wnthat at points w h e re the e c o n o my is growing fastest o ne of the cruciallimitations o n forther g r owth is frequently the supply of skilled people.In S w e d e n, for e x a m p l e, a ny decision by the G o v e r n m e nt to e x p a nd thesocial services is limited directly by the n u m b e r of doctors, social workersa nd other trained personnel likely to be available in the next ten years.W h e n r e a r m a m e nt started in the early 1950s m a n y countries reportedacute shortages of scientists a nd engineers, w h i ch held ba ck theirp r o g r a m m e s. T h e rate of road-building in Britain has be en limited bythe availability of compe t ent civil engineers. T h e se facts h a ve led m a n yeconomists to the view that the supply of skills is itself a factor in e c o n omicg r owt han important factor w h i ch is quite distinct from the question of

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1. See Michael Kser, 'Needs and Resources for Social Investment', InternationalSocial Science Journal, Vol. X I I, N o . 3, p. 409-33.621 I N T E R N A T I O N A L S O C I A L S C I E N C E J O U R N A Lattitudes to e conomic growth a m o n g the population at large, wh i ch w ehave already discussed.

In ma k i ng projections of the needs for skilled m a n p o w er of all sorts,it has been possible to calculate back into the education system the n u m b e rsof educated people required in order to produce the necessary skills toservice the e c o n o m y. This c omp l ex art has been the basis of the Frenchplanning system a nd plays a major role in the U . S . S . R . It is c omi ng tothe fore in countries like the Netherlands, Yugoslavia a nd S w e d e n. It isn o w seen to be of critical importance in the developing countries of Asia,Africa, and Latin Ame r i c a. In Nigeria, for exampl e, the A s h by Reportsuggests that in order to produce the skilled people needed to maintainthe rate of growth of the Nigerian e c o n o my wh i ch is desirable, the expansion of the educationservice will have to be considerable. T h e s a me has

be en s h o wn in reports on Pakistan a nd Greece. Consequently a great dealof w o rk on m a n p o w e r forecasting has a direct relevance to the educationsystem itself. T h e link between skills and the schools seems to be at theheart of the subject.T h e specialized role of m a n p o w e r forecasting has thus been anotherforce bringing the economics of education into prominence. It has botha wi de and a na r row interest. In m a n y countries, for instance, the growthof the educational service is limited by the supply of teachers. All forecastsof the likely d e m a n d for their services a nd of possible supply suggest thatover the next ten or twenty years there are likely to be serious shortfalls.Wi thin education itself the economist has a special role to play in analysingthese shortages. Certain conclusions follow from his w o r k. It has be en feltincreasingly, for e x amp l e, that investigation is needed into the technologyof education. Education itself is an industry like a ny other. It has certaininputs a nd certain outputs. T h e se outputs are not easily defined, butneither are the outputs of m a n y service trades because they do not readilyproduce series of concrete objects wh i ch can be presented as a statisticalseries, as happens, say, for the output of electricity or motor cars a nd alsobecause education is not normally bought a nd sold a nd consequently hasno definable monetary output. T h e consequences of this are twofold. It isbelieved of education in particular and of the service trades in generalthat their technology is stagnant a nd that, therefore, as productivityrises in the rest of the e c o n o my they tend to b e c o me relatively m o re expensive. O n theother h a n d, because their output cannot be measured, becausethere is not a time series showing h o w the productivity of education haschanged, there has be en little w o rk d o ne on the possibilities of reducingthe unit cost of education. A n d since the technology of education is notinvestigated, it does b e c o me stagnant.Since education is the largest single user of skilled m a n p o w er in ane c o n o my a nd since skilled m a n p o w e r is likely to remain scarce in mo st

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economies, it follows that the education system is likely always to be shortof teachers. Consequently any substantial attempt to step up the outputof education mu st d e m a n d a substantial change in its productivity.622 E C O N O M I C S O F E D U C A T I O NIn the articles wh i ch follow the question of the remuneration a nd

status of teachers is not u n d er discussion. It w o u ld s e em that because ofthe likelihood of continuous scarcity of their services their incomes willtend to rise relatively to those of i n c ome earners in general. If steps couldbe taken to increase the productivity of teachers by the use of ancillaryworkers a nd m o d e rn technological devices, it is highly probable thattheir professional status w o u ld be enhanc ed, a nd that this in turn wo u ld tendto raise their remuneration.W a g e s are affected not only by relative scarcity in the labour ma rke t,but also by the social standing of different groups of workers, since thelabour ma rke t, as Barbara W o o t t on has indicated, is exceedingly imperfect.1

T h e study of the relative status of the teaching profession throughout theworld is a matter in wh i ch economists a nd sociologists could well c omb i neso as to m a k e effective a nd authoritative contributions to one of the mo stinteresting social questions of our time. T h e status of teaching is indisputably b o u nd up with thestatus of education a nd on the status of educationa great deal in society depends.All these forces, then, c o m b i ne to m a k e the economics of education anurgent, exciting a nd important subject. T h e papers w h i ch are presentedhere deal with a n u m b e r of topics.First, there is the contribution wh i ch education c an m a k e to the econo m y . Professor Strumilins h ows that differences in the earning p o w er ofpeople with a nd without education are very great, a nd that this reflectsdifferences in their physical productivity. A similar point about earninghas b e en m a d e in n u m e r o us studies in the United States. This has led, fore x amp l e, to the slogan that a college education is wor th $100,000 (and isn o w said to be wor th 1250,00o) .2T h e m e t h od w h i ch is adopted is to take earnings through out theworking life, discounting for sexual, social a nd morbidity characteristics,a nd the result shows the difference w h i c h, as far as c an be ascertained, isattributable largely to education. It is true, of course, that m u c h of thisw o rk suffers from multiple correlations; that is to say, a m a n with a g o odeducation is likely to be also s ome o ne brought up in favourable familycircumstances, favourable geographical circumstances, a nd w h o has otheradvantages, physical a nd psychological, w h i ch w o u ld in a ny case enableh im to do well throughout life. It could be said, perhaps unfairly, thatexponents of this w o rk are discounting the inequalities of the e conomicsystem, a nd no m o r e .3Nevertheless, if y ou could take identical twins a nd

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give t h em clearly favourable circumstances, but allow o ne of t h em tohave educational advantages while the other w as m a d e to begin w o rkearlier, it seems highly probable that the twin with educational advantages1. Barbara Wooton, The Social Foundations of Wage Policy, L o n d on 1956.2. Here a variety of sources are available for study. See, for example, Theodore

W . Schultz 'Investment in M a n : an Economist's V i e w ', The Social Service Review,University of Chicago, Vol. 33, June 1959.3. See m y The Economics of Education, Chapter III.623 I N T E R N A T I O N A L S O C I A L S C I E N C E J O U R N A Lw o u ld be the m o r e highly paid of the t w o. This extra i n c o me w o u ld m e a s u reto s o me extent at a ny rate the contribution w h i ch he has m a d e to societybecause of his education.Nevertheless, as Professor B o w m a n points out, there are differencesb e t w e en the individual's r ewa rd a nd the r ewa rd w h i ch society as a w h o lem a y get. T h e se differences m a y be that the advantages of his educationaccrue to s o m e b o dy else, as m i g ht h a p p en in a system of slavery or exploitation. T h e re

m i g ht be advantages to a c o m m u n i ty in having educatedpeople in it w h i ch d o not necessarily a c c rue to the individual. S u ch peoplem i g ht be ready, for e x a m p l e, to accept voluntary responsibility in n o n -remunerative activities; they m i g ht be less prone to c r ime, less likely tom a k e d e m a n d s on the social services, w h i ch are excessively used by thethoughtless a nd incompetentall this w o u ld be a s o m e w h at imme a s u r a b le'return'. F u r t h e rmo r e, the m a r k et for labour is a highly imperfect o n e.Differences in w a g es a nd salaries at m o st only indicate differences ofmarginal physical productivity a nd do not m e a s u re t h e m, a nd they d onot necessarily s h ow the contribution w h i ch is being m a d e to society b ythe individual concerned. In a characteristically brilliant contributionM r . Debe auva is s h ows h o w the d e v e l o pme nt of e c o n o m ic thought o n thesubject of the returns to skill w a s de t e rmined b y the structure of the labourm a r k et in the nineteenth century. T h e imperfection of the labour m a r k etas it w as then m a d e it difficult to d e d u ce the connection b e t w e en the inputsof skill a nd the w a g es of labour; a nd furthermore the classical theory(whi ch w a s fundamental b o th to the neo-classicists a n d to the Marxists)treated labour as a statistically simple series of units. W e see h o w theelementary education, w h i ch w as all the producer required, w as u n d e rtaken by the c o m mu n i t y, a n d that the professional training of skills w a saccepted by business. This led the industrialists a nd the economists of thenineteenth century to neglect the costs of training, w h i ch did not enterinto the entrepreneur's calculations of profits. F or these a nd other reasons,therefore, the simple correlation of earnings through a lifetime wi theducational b a c k g r o u nd is not necessarily a decisive indicator of the c o ntribution w h i cheducation m a k es to e c o n o m ic life. It certainly is not, ofcourse, a ny indicator of the contribution w h i ch education m a k es to theculture. T h e reason w h y calculations of this sort are undertaken is toenable policy decisions to be m a d e a b o ut the degree to w h i ch educationshould be e x p a n d ed relative to expenditure o n physical plant a n d buildings

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in productive business. Therefore the yield of education has to be expressedas a rate of return o n its costs.1T h e w h o le question of h o w to m e a s u re educational expenditure hasc o m e to the fore in recent years. Until very recently the statistical

calculations represented only that part of G o v e r n m e nt expenditure w h i chi. O E C D Policy Conference on Economic Gr owth and Investment in Education:Paper II, Targets for Education in Europe in igyo (by Ingvar Svennilson, in association withFriedrich Edding and Lionel Elvin).624 E C O N O M I C S O F E D U C A T I O Nw as labelled 'educational expenditure' a nd therefore excluded gove rnmentexpenditure on education w h i ch appeared u n d er other budgetary heads,a nd excluded private expenditure. Furthermore, there w as no attempt tobreak d o w n expenditure on education into its c o m p o n e nt parts a nd toensure that these we re internationally compa r abl e. N o r w as there anyattempt to express this expenditure as a proportion of the gross national

product. T h e first attempt to do this in a systematic w a y in a single countrytook place in 1958.1Since that time a substantial a m o u nt of progress has

been m a d e in the systematic me a s u r eme nt of educational expenditure,w h i ch allows valid international comparisons to be m a d e . This improvem e n t in financial and e conomic statistics has be en a c compani ed by anattempt to bring s o me sort of order into educational statistics generally.A rapid imp r o v eme nt is n o w taking place throughout the world in thisrespect. For the first time it has b e c o me possible to s h ow h o w far thepercentages of age groups at school in different parts of the world arecapable of being validly c o m p a r ed with o ne another. This imp r o v eme nt inthe statistical basis of knowl edge about educational realities will enable asubstantial a m o u n t of progress in theoretical w o rk to take place.2O n e such conceptual issue whi ch divides scholars is the question of'earnings foregone'. H o w far should the costs of education include notonly outlays on salaries a nd goods and services, but also w h at the studentsmight have earned h ad they b e en at w o rk a nd not studying? In nationali n c ome accounts as they are c o m m o n l y presented it seems probable thatthere is little or no place for the concept of earnings foregone. T h e nationali n c o me is tied fairly closely to monetary flows, a nd a ny departure fromthese flows has to have serious justification. It is argued by those w h osupport the view that earnings wh i ch students mi g ht have m a d e h ad theynot been studying represents a real e conomic loss, that not to mention orcalculate the extent of this loss m e a ns underestimating the cost of education.T h at there is s o me truth in this point of vi ew cannot be denied, but m a n yw o u ld feeland I wo u ld have thought that their a r g ume nt carried considerable weightthatthis loss is best presented in terms of physicalquantities, that is to say, the degree to w h i ch the labour force is reduced by

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difficulty, of course, aside from the general one of estimating yield of a service activity, is that thechange in process of whatever kind in the schools islikely to yield a s o m e w h at different set of products than formerly we re h a d .'This shows that it is difficult to me a sure the usefulness a nd effectivenessof n e w developments in education. Nevertheless, the general point remains

that changes in techniques h a ve taken place in education a nd will continueto take place. Because they are the result of pedagogical research, thesechanges have often be en insulated from the pressure occasioned by therelative scarcity of different factors, a nd have therefore tended frequentlyto be cost-raising rather than cost-reducing. It follows that the basis ofexpansion in education, assuming (as w e mus t) that resources are limited,m u st be a form of technological change w h i ch is cost-reducing; such an1. Alanpower Needs in an Age of Science, Paris, O E E C , i960.2. See Investment in Education, Nigerian Federal Ministry of Education, i960 (TheAshby Report).626 E C O N O M I C S O F E D U C A T I O N

expansion could both throw open education to m o re people and m a k e itm o re effective, if future research a nd development on an operational basiswe re to relate to k n o w n economic scarcities.It is certain that educational research has for the most part m e a ntinvestigation of psychological data. This has profoundly changed teachingpractice throughout the world by revealing m o re the nature of childrena nd by revealing m o re about the nature of the learning process itself. T h eproblems in education w h i ch are n o w c o m i ng to the fore s e e m, howeve r, totranscend these psychological problems. T h ey are problems of scarcitya nd shortage, problems of social adjustment, problems of poverty a ndilliteracy. T h e y are in other words problems in economics a nd sociology.It m a y be taken as an accepted fact that the elimination of poverty is themajor probl em facing mo st of the nations in Asia, Africa, a nd Latin Ame r i caat present. This m e a ns that the fundamental intellectual problem facingworkers in the social sciences is h o w to aid the acceleration of economicgrowth.M a n y economists in recent years have turned their attention to theproblem of economic growth in the poorer areas of the world. T w o contributions here areconcerned with this issue in relation to educationthoseof Professor W . Arthur Lewis a nd M . Michel Debeauvais respectively.It is wor th pointing out w h at education can do a nd w h at it cannot d o.As has be en observed above, a great deal of education wh i ch is culturalin content m a y be harmful to growth a nd certainly need not necessarilypromote it. O n the other h a n d, certain parts of education are an essentialpreliminary to growth. T h u s the whole question of the content of educationa nd of the me thods by wh i ch instruction is given is raised by any consideration of the place ofeducation in economic growth. Economists havea bias towards subjects wh i ch appear to promote rational me thods ofthought, like mathematics a nd the natural sciences, towards subjects wh i chbreak u p accepted attitudes, like sociology and other social studies, and

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towards practical subjectscrafts a nd elementary agricultural skills wh i chenable people to develop their capacity to earn their o w n living. T h e wholequestion of the appropriate balance of education is raised by the paradox ofintellectual u n e m p l o y m e n t .1

In country after country throughout the developing nations there is athirst for education w h i ch exists alongside severe intellectual u n emp l o ym e n t. Prima faciethis is evidence of an imbalance in the content of thecourses. At a recent meeting, for e x amp l e, the Swedish Minister of Educationd r ew attention to the shortage of scientists and engineers, at the s a me timeto the apparently growing surplus of those educated in the humanities.2In countries like India this imbalance takes the acute form of there beingi. Report of the Committee on National Education, Karachi, Pakistan Ministry ofEducation, i960.2. O E C D , Ability and Educational Opportunity in a Modem Economy (Report on the

Conference organised by the Office of Scientific and Technical Personnel incollaboration with the Swedish Ministry of Education, Kunglv, June 1961).627 I N T E R N A T I O N A L S O C I A L S C I E N C E J O U R N A Lno jobs for those with qualifications in the humanities. Nevertheless, thisis a superficial explanation of the reasons w h y intellectual u n e m p l o y m e ntexists. T h e real reasons lie deeper.The re is, first of all, the unwillingness of people w h o have achievededucational qualifications to w o rk in jobs wh i ch they feel fall below theirappropriate social status. T h u s a graduate will often be unwilling to teachin a village school and he is able to maintain himself without w o rk becausethe extended family system m a k es it possible for h im to live on his family'sresources. E v en m o re profoundly the w a ge a nd salary structure of a societym a y inhibit the e m p l o y m e nt of qualified people because the conventionalsalary for a graduate m a y be such that it is substantially greater than he isworth to the firm whi ch w o u ld otherwise emp l oy h i m. Gradually, however,the existence of u n e m p l o y m e nt and pressures for social change will tendto eradicate the social snobbery whi ch prevents people from taking jobswhich they consider beneath t h em, and, as Professor Lewis points out,the growing pressure of n u m b e rs of educated people will tend to drive d o w ntheir income differential. This will of itself tend to raise the level of employm e nt a m o n gintellectuals relative to that of other people.Nevertheless, a fundamental problem still remains. In a country withsubstantial reserves of m a n p o w e r and w h i ch is short of physical capitaland this is almost a definition of an underdeveloped countrya choicem a y be m a d e between developing the e c o n o my along conventional linesa nd keeping substantial labour reserves underemployed or unemployed,and developing the e c o n o my by ma k i ng use of these labour reserves forintensive techniques of production. T h e latter is in fact regarded by m a n yeconomists as the most appropriate form of economic development form a n y Asian nations. This m e a ns that the use of labour p o w er to develop

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the e c o n o my m u st not be inhibited by an inappropriate w a ge and salarystructure. T h e consequences of such a view in the matter of educationalpolicy are profound.In the first place, the skills whi ch are necessary for an e c o n o my whichis developing by labour-intensive me thods are different from those whi ch

are appropriate to one w h i ch is developing by capital-intensive me thods.A different sort of worker a nd a different sort of supervisor are required.This m e a ns that the imitation of overseas models of education is even m o reinappropriate than it seems on purely sociological a nd anthropologicalgrounds. B ut it also m e a ns that the development of a wa g es a nd salarypolicy whi ch leads to the greater e m p l o y m e nt of people (and particularlyof skilled a nd qualified people) is inescapable. N o w h e re is this dilemmaford i l emma it is, in terms of pratical politicsmore evident than in the educational system itself.T h e basic factor wh i ch education m a k es use of is m a n p o w e r . By definition, in mo st poorcountries m a n p o w er is relatively cheap (though, ofcourse, skilled m a n p o w er m a y be relatively expensive). Also in country

after country there are u n emp l o y ed intellectuals, while the schools are shortof teachers. It follows that the possibility of developing the educational628 E C O N O M I C S OF E D U C A T I O Nsystem depends to a considerable extent u p on driving the cost of teachersd o w n to the levels at whi ch the u n e m p l o y ed intellectuals can be fullyabsorbed, or on devising m e a ns by w h i ch they can be employed. This isa pa r adox indicating that the existing money/pr i ce system does not reflectthe prevailing scarcities of real factors in an e c o n o m y. It is also a probl emin public finance, since the education system is usually largely financedfrom the Excheque r, a nd therefore there is a genuine fiscal barrier to theexpansion of the education systema fiscal barrier wh i ch distorts thechoices of paths of development a nd prevents their being taken in the lightof the prevailing real scarcities a nd abundancies of e conomic factors.T h e re wo u ld s e em to be three courses o p e n. T h e first (which is appropriate to a socialist ec o n o m y) w o u ld be to determine the wages a nd salariesin the light of prevailing e conomic realities a nd the social values wh i chshould be attributed to different professions. In this context the techniqueof shadow-pricing (which wo u ld enable the salary of a teacher in thegove rnment accounts to appear very low, whether or not he w as paid ahigher salary) w o u ld on our assumptions of intellectual u n e m p l o y m e ntclearly indicate a substantial expansion in the education system. In otherwo r d s, on this assumption a nd in a given context, the strength of thesocialist system lies in that it r emoves the barrier to educational (andeconomic) growth wh i ch exists because of the difference between the pathdictated by reference to the real forces in a situation a nd the path wh i chis indicated by the mone t a ry distortions of those forces a nd the prevailingfiscal barrier. T h e practical difficulties in pursuing a policy by referenceto real rather than mone t a ry forces are of course great, especially in an o p ene c o n o m y. T h e second course w o u ld be to adopt a policy of laissez faire.It could well be argued that this w o u ld not by itself lead to such a pattern

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of mone t a ry prices as to enable growth to take place as rapidly a nd aseffectively as a direct calculation in terms of real scarcities, by the techniqueof shadow-pricing, for exampl e, assuming that this could be accuratelya nd effectively m a d e .T h e third possibility whi ch offers an alternative to both full-blooded

socialism a nd laissez faire is not really an intellectual alternative to either,but a pragmatic c omp r omi se or an evasion of the issue. Nevertheless, itreflects the acuteness of the choice of paths of development (with all itssocial a nd political consequences) wh i ch any developing nation has tom a k e . This is the use of substantial overseas aid in order to develop theeducation system. W i t h regard to this, there exist t wo different schools ofthought. At regional meetings in Asia, Africa a nd Latin Ame r i c a, the poorercountries have called u p on the wealthier countries to devote s u ms runninginto billions of dollars to overseas aid in developing education. T h ea r g ume nt advanced is that the s u ms required to develop education are solarge that the poorer countries cannot by themselves provide t h e m.

Nevertheless, it is difficult to see h o w overseas finance can directly helpin the development of an educational system. T h e real problem is of coursethe supply of teachers. H o w e v e r , the possibility of using a substantial629 I N T E R N A T I O N A L S O C I A L S C I E N C E J O U R N A Ln u m b er of overseas teachers in a developing e c o n o my is not great, not onlybecause teachers are scarce already in the richer countries, but because theydo not speak the language of the countries to wh i ch they mi g ht be sent,a nd because the development of an educational system by foreign nationalsis not socially or educationally desirable. Consequently, the supply ofteachers in large n u m b e rs from the richer to the poorer countries is notreally a practical policy. T h e supply of books, teaching e q u i pme nt a ndtemporary buildings from overseas nations is, of course, a possible a ndfruitful material contribution, though it represents a small part of the totalcosts involved. It is therefore difficult to see h o w the millions of dollarswhi ch have be en asked for can be turned into those real factors wh i ch arenecessary for the development of education.In a country, howeve r, with considerable intellectual u n e m p l o y m e ntthe major real factor already exists a nd lies unused, a nd the limitation ofgrowth in m a n y sectors of the e c o n o my (including education) is m o re oftenthan not the balance of p a yme n t s. A n y attempt to accelerate economicgrowth within the country reveals itself first in an inflation a nd then,instantly, in a serious deficiency in the balance of p a yme n t s, w h i ch has to becovered by overseas aid. T h e greater the degree to wh i ch this deficiency iscovered the m o re rapid the possibility of e conomic growth within thecountry, subject, of course, to real limitations of certain crucial items ofsupply. Therefore a ny measure w h i ch leads to the greater support of thebalance of p a y m e nt can permit m o re rapid growth of a particular industryor service, if the growth of that service is not itself held back by a crucialbottle-neck. (In a country with intellectual u n e m p l o y m e nt this bottleneck should not exist foreducation, because the supply of pupils a nd

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teachers is, by definition, available for rapid expansion.)T h e a r g ume n t, therefore, for overseas support of education is a specialcase of the a r g u m e nt for general overseas support for the balance ofpayments in developing countries. It has never yet been m a d e clear h o wfar this special support of a particular service is likely to increase the total

of overseas aid available, or h o w far it is a device to divert activities insidethe country towards that servicein this case, education. If it is the first,then propaganda for greater overseas aid is entirely to be w e l c o m e d. If it isthe second, then it m a y be that the development of education will accidentally be given priority wh e n it should not. T h e case of special supportfor particular purposes is on the verge of external interference in internalaffairs, wh i ch has been strongly objected to by the receiving countries.As suming h owe v er that the growth of education will take place asrapidly as possible, with or without overseas aid, Professor Lewis raises aseries of questions of the greatest interest a nd importance. O n e of these isthe extremely high cost of education in the poorer countries. M r . Benson's

a r g ume nt for technological development, w h i ch w as referred to above,is even m o re appropriate in this context than in the wealthier countries ofthe world, especially as the poorer countries are, in fact, using an importedtechnology in their education systems wh i ch is clearly inappropriate to630 E C O N O M I C S OF E D U C A T I O Ntheir real needs, not only economically, but culturally a nd socially as well.It is clear that a 'technological breakthrough' is essential at this stage ifeducation is to develop rapidly a nd effectively.Professor Lewis raises a further question w h i ch is just as important:the appropriate shape of the education pyr amid. In all developing countriespressure exists (for democratic reasons alone) for expansion of primaryeducation. This in turn produces candidates for admission to secondaryeducation (and ultimately to tertiary education). A n y expansion of primaryeducation leads to a consequential expansion of the other sectors. B utthese sectors are affected by forces tending to m a k e t h em expand disproportionately. In order,for e x amp l e, to provide the skills necessary for thee c o n o my there is also a tendency for the secondary a nd tertiary sectors toe x p a n d, independently of the supply of candidates c o m i ng from the primaryschools. T h e most striking instance of this is the supply of teachers. Primaryeducation can only expand as fast as the n u m b er of primary school teachers.It follows that the expansion of secondary a nd tertiary education is linkedfunctionally (by the pupil-teacher ratio a nd the rate of attrition of theexisting stock of teachers) to the growth of the primary education system.This relationship determines to an extraordinary extent the pattern ofeducational growth within a country, a nd without a fundamentalre-thinking of the whole structure (such as that proposed by ProfessorStrumilin) it is very difficult for policy decisions to be reached on mattersof expansion a nd restriction.T h e study of the fundamental relationships be twe en different parts ofthe education systemwhat might be termed an experiment in educational

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logisticsdemands a considerable degree of e conomic sophistication sinceit is an exercise in choice with limited resources. So far w o rk wh i ch has beend o ne in this field tends to rely u p on two different sorts of approach. O n e isto investigate the prevailing numerical relationships between differentsections a n d, on the basis of such information as is available, to project

w h at these numerical relationships are likely to be for the future. Fore x amp l e, the rate of growth of children in the sixth forms of English schoolsis thought to be increasing by something like i y2 to 2 per cent per year,a nd plans have therefore to be m a d e to a c c o m m o d a te t h em on the a s s u m ption thatthis growth rate will continue. M o r e profound investigationmight s h ow the forces underlying these relationships a nd enable predictionsto be m a d e about likely alterations in their nature.This leads on to a second m e t h o d, wh i ch is the construction of hypothetical models derivedquite frequently from international experience. The sesorts of charts are used to great effect in Une s co's handbooks on worldeducation. T h ey nevertheless imply that certain prevailing m o d es of

organization c an easily be imported or exported. Professor Lewis's w o rkis a reminder that this kind of a r g ume nt is a dangerous one, even thoughit m a y be inevitable in the present situation w h e re there is a dearth ofstatistics a nd organizational capacity in m a n y of the developing nations.It is dangerous because the tendency to copy a form of organization grows631 I N T E R N A T I O N A L S O C I A L S C I E N C E J O U R N A Linto the tendency to copy that form in its most minute details, a nd thishas led to palpable absurdities, such as the widespread use of the classicalcurriculum of Fr ench lyces a nd English public schools in tropical areas,while the study of the local culture is totally neglected.M r . Debeauvais' suggestion of a similar p y r amid of h u m a n capital foreach major e conomic sector is a strikingly original parallel deve lopment tothis m e t h od of analysis of educational systems, wh i ch might well haveimportant practical application. T h e reform of education a nd its realignment with the needs of thee c o n o my is of great importance for the developing nations, a nd M r . Debeauvais' proposed me t h od suggests a fruitfulw a y in wh i ch the contribution of the economist to the analysis of educationmight be advanc ed.In this field, as in m a n y others, the economist acts as a craftsman, oras a critical c omme n t a t o r, a nd his contribution should perhaps be less onthe highly theoretical planeas, for instance, a discussion of the relationship between future i n come a nd present a nd past outlays on educationa nd should consist m o re in m a k i ng pragmatic a nd helpful suggestions tostatesmen a nd administrators grappling with the i m m e n se task of bringingeducation to poor countries.632 A. S T U D I E STHE ECONOMICS OF EDUCATIONIN THE U.S.S.R.S T A N I S L A V S T R U M I L I NIn the U . S . S . R . the education a nd upbringing of the younger generation

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are closely associated with life a nd socially useful w o r k. Adults m a y , whileactually engaged in production, continue their studies according to theiro w n personal vocation a nd preferences. In conformity with the objectivesof the n e w p r o g r a m me of the C o m m u n i st Party of the Soviet U n i o n, thissystem of education promotes the all-round development of the m e m b e rs

of communi st society, thus contributing towards the solution of one of themost important of all social problems: the elimination of the essentialdifferences between intellectual a nd physical w o r k.T h e educational system also promotes the achievement of the country'simmediate economic tasks since it is a potent factor for progress in thissphere, a nd also for the rapid increase of productivity.In the U . S . S . R . education at all levels, from primary to higher, is free.It is financed mainly from the accumulation of collective socialist productions; and from 1965, w he n taxes will no longer be paid by the population,it will be supported entirely by the resources of the e c o n o m y. Increasingattention is being given to estimating the returns to be expected from investments in this field of

cultural construction.Private entrepreneurs are usually guided in m a k i ng investments by thea m o u nt of profit they h o pe to derive from t h e m, without considering theinterests of other people or of society as a whol e. Profit rates, however,depend also on various factors affected by the general situation, such asspontaneous fluctuations in market prices, b o o ms a nd slumps, competitionof monopolies, a nd speculations on the stock exchange, strikes, etc. In thesocialist countries, on the other h a n d, wh e re private capital a n d, consequently, variations in thegeneral situation, play no part, such a criterionas a high profit rate cannot provide a sufficiently accurate or objectiveyardstick for measuring the return from investments, mainly because theinterests of the whole society must be taken fully into consideration w h e nthe expenditure of sums derived from collective saving is involved. T h eprofit rate never represents m o re than a part of the returnonly that partreceived by the owner of a given enterprise. T h e total return from a pa rticular investment can bemeasured only by the resulting increase in thesocial productivity of labour since this not only raises the rate of profit for633 I N T E R N A T I O N A L S O C I A L S C I E N C E J O U R N A La given enterprise but also reduces the cost of a certain category of productsfor the whole of society.T h e productivity of labour is determined by various factors, the mostimportant of wh i ch are a high standard of technology and the extent towh i ch h u m a n labour is assisted by p o w e r. At the present time automationa nd remote control are being m o re a nd m o re widely introduced a nd constantadvances are being m a d e in the use of cybernetics a nd electronics. T h eapplication of science is be coming a decisive factor in the development ofthe productive forces of society a nd the time will c o me w h e n science itselfwill be a direct productive force in the fullest sense- of the term. But, if thisis to be brought about, m o re a nd m o re of the population mu st be familiarized with theachievements of science a nd this is possible only if large

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investments are m a d e in school a nd adult education. T h e most advancedtechnology can produce no results until it has been assimilated by theworkers, a nd the m o re complex a nd expensive technical equipment is,the wider the sphere of knowledge without wh i ch it is easier to break itthan to use it properly, the m o re important it is to have a wise economic

policy with regard to education, a nd the m o re fruitful capital investmentsin this field b e c o m e.This has been confirmed by the experience of the U . S . S . R . Prerevolutionary Russia w asnotorious for its almost entirely illiterate population. For this reason the n ew workers' a ndpeasants' government h ad tobegin its cultural w o rk by measures to do a w ay with illiteracy a m o n g thepopulation at large. O n 26 N o v e m b er 1919, while still involved in thedifficult struggle against counter-revolution a nd foreign intervention,the Soviet G o v e r n m e nt published a decree concerning the abolition ofilliteracy a m o n g all adults under fifty years of age. This w as achievedwithin twenty years. As early as 1924, however, the country w as confronted

with an e n o rmo us n e w task of the s a me order. A draft ten-year schooldevelopment plan designed to provide universal free a nd compulsoryeducation for all children, starting with not less than four years' primaryeducation, w as submitted to the State Planning Commi s s ion ( G O S P L A N )for consideration. It w as at this time that G O S P L A N specialists firstbegan to give serious attention to the economic returns from expenditureon school education.Consideration of the salaries a nd productivity of different categoriesof m a n u al a nd other workers in relation to their educational qualifications,s h owed conclusively that even the most elementary school education ism u c h m o re beneficial to a worker than a similar period of practical trainingat the bench. In m a k i ng these calculations, w e took into account the effectsof several factors, such as age, professional experience a nd technical qualifications. For exampl e,the rudimentary instruction gained in one year ofprimary education increases a worker's productivity on the average by30 per cent, whereas the imp r o v eme nt in the qualifications of illiterateworkers and the increase in their output, resulting from a similar periodof apprenticeship at a factory, is only 12 to 16 per cent a year. T h e improve-634 E C O N O M I C S OF E D U C A T I O Nm e nt in qualification resulting from one year's education at school is, onthe average, 2.6 times greater than that resulting from one year's apprenticeship. After four years'primary education, a worker's output a nd wagesare 79 per cent higher than those of a first-category worker w h o has had n oXf schooling. After seven years' study (incomplete secondary course), anoffice worker's qualifications m a y be as m u c h as 235 per cent above thelowest level; after nine years' study (complete secondary course), as m u c has 280 per cent a b o v e; a nd after thirteen or fourteen years' study (highereducation), as m u c h as 320 per cent1

above.

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Highly qualified workers lead to high productivity of labour a ndincrease not only their o w n earnings but also the social product a n d,consequently, the national income. T h e return from education m a y alsobe determined by compa r ing a society's expenditure on school educationwith the resulting increase in the national i n c ome. For exampl e, according

to the calculations m a d e in 1924, the s u ms required to carry out theproposed reform in primary education (increase the n u m b er of childrenenrolled in schools from four to over eight million in ten years) we reestimated at 1,622 million (old) roubles. T h e increase in the nationalincome resulting from the rise in the productivity of labour of workerseducated during those years w as already by the end of the period (afteronly five years' e m p l o y m e n t ), as m u c h as 2,000 million roubles, whi chm o re than covered the expenditure. T h e active life of a worker, betweenleaving school a nd retiring, is, however, not five but thirty-five to fortyyears a nd the greater competency acquired by study at schoolthe costof whi ch is broadly offset after the first five years of employmentcontinues

to serve without placing a ny burden on the budget. According to the s a meestimate, the enormous rise in the productivity of labour d ue to primaryeducation will increase the national i n c ome, over this period of years,not by 2,000 million but by 69,000 million (old) roubles.2

S u ch are thereturns from primary education, which is the least expensive to provide.T h e first major objective of the Soviet educational development planw as in fact already practically achieved by the beginning of 1934. C o m -pulsory primary education w as provided everywhere a nd the length of thecourse h ad be en extended to seven years in the towns. T h e next object w asto introduce secondary education for all. Al though progress w as temporarilydelayed by Hitler's invasion, the wo rk is n o w well on the w a y .T h e n e w p r o g r a m me of the C o m m u n i st Party of the Soviet U n i on setsforth the following objectives: the introduction of eleven years' compulsorysecondary general a nd poly technical education, by 1970, for all children ofschool age in both t own a nd country, a nd of eight years' education for ally o u ng people already employed in the national e c o n o my w h o have not h adsufficient education. Be twe en 1970 and 1980 all will have the opportunity1. Details of these calculations will be found in Stanislav Strumilin, Problem?ekonomiki truda (Problems of Labour Economics), published in the U . S . S . R.in 1957 (p. 155, 156, 175, 178).2. Ibid., p. 165.635 I N T E R N A T I O N A L S O C I A L S C I E N C E J O U R N A Lof completing a full secondary education. T h e development of secondarya nd higher education will continue as n e w advances are m a d e in sciencea nd technology. Those so wishing will be able to pursue higher or specializedsecondary education (either full-time or while working in production) inhigher technical education establishments or people's universities.Soviet achievements in the development of the educational system s h ow

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the following results.Be twe en 1924 and 1934 alone, enrolments for the shorter primaryschool course (four years) rose from 8.3 million to 18.3 million, the latterfigure covering nearly all children in the appropriate age group. After aconsiderable falling-off during the w ar years, the s a me level w as again

reached a n d, by i960, there were 18.6 million pupils enrolled for the firstfour years.T h e n u m b er of older children receiving general a nd specialized education enrolled in grades Vto X in secondary schools, a nd in technicums,a nd the n u m b er of students attending higher educational establishments,is increasing even m o re rapidly (see Table 1).T A B L E I. Increase in enrolments within the U . S . S . R. since Tzarist times (inthousands of pupils)Type of school 1914 193011940 1950 i960

Secondary general (grades V -X)Specialized secondaryHigher educational establishmentsTotalPercentage1. 1930 is taken as the base year, repre!2. 2.6 million in 1961 [Pravda, 25 Octob5063611265422renting 100er 1961).2 04a5872882 9 17100137969758121558353414 6121 2981 24717 157588

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173922 0602 3g6221 848

749Be twe en 1930 a nd i960, the population of the U . S . S . R . increased by39 per cent a nd the n u m b er of enrolments in educational establishmentsabove the first level increased 7.5 times, or 22 times in comparison with 1914.As a result, the specialized workers mo st urgently needed for the nationale c o n o my we re rapidly trained. T h e n u m b e r of graduates of secondary a ndhigher educational establishments also increased from year to year, as didthe n u m b er of teachers, doctors, engineers a nd scholars. Table 2 shows thepost-revolutionary growth in this field (within the Soviet U n i o n ).Dur ing the early years of the planned reconstruction of Soviet industry,m a n y people thought that technology w as the solution to all problems. B ut

the first attempts to get uneducated workers to master technical me t h o dsproved so difficult that another slogan h ad to be adopted: specializedworkers provide the solution to all problems. It w as for this reason that thetraining of specialized workers at educational establishments expanded so636 E C O N O M I C S OF E D U C A T I O N "T A B L E 2. N u m b er of graduatesType of schoolSecondary generalSecondary technicalHigher general and technicaleducation establishmentsTotalPercentage(in thousands)1914no dataavailable4-910.7no dataavailable19304861.443-9!53-31001940277

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2371266404171950

284314177775506i9601 0554843431 8821 SS3

considerably be twe en 1930 a nd 1940. T h e w a r slowed d o w n this processbut the years of peace be twe en 1950 a nd i960 s aw it continuing a nddeveloping once m o r e. B e twe en 1918 and i960, higher educational establishments' aloneproduced 4 , 7 8 1 , 0 00 specialists, a nd secondary technicalschools 7,744,000, m a k i ng a total of 12,525,000, of w h o m 6 , 7 5 5 , 0 0 0, or54 per cent, graduated during the last ten years.1M u c h w as also d o ne to eliminate illiteracy. B e twe en 1920 a nd 1939,special schools a nd courses gave training to over 96 million illiterate orsemi-literate adults. Furthermore, over a period of only twelve years(from 1924 to 1 9 3 5 ), 30.9 million children completed primary school(four-year course) a nd incomplete secondary school (seven-year course).Table 3 indicates the rate of increase in the n u m b e r of specialists withhigher a nd secondary education in the U . S . S . R . over the twenty-yearperiod 1939-59.2In twenty years (1939-59), the population of the U . S . S . R . rose from190.7 million to 2 0 8 .8 million, representing a n increase of 18.1 million, or9.5 per cent, while the economically active population rose from 88 to99 million persons, an increase of 12 per cent. T h e n u m b er of personshaving received higher or secondary education increased by 43 million,or 2 70 per cent, despite the losses d ue to the w a r . A n even greater increasein this proportion is to be observed a m o n g the gainfully emp l o y ed population (335 per cent) :in the case of industrial a nd collective-farm workersengaged mainly in m a n u al w o r k, the proportion of those with higher a ndsecondary education rose from 4 .3 to 31.6 per cent; for industrial workersas a wh o le the figure is as high as 38.6 per cent, reaching 53.5 per cent inthe case of the metallurgical a nd metal-working industries, 64 per cent inthat of the printing a nd publishing industries, a nd still higher percentagesfor certain other categories of workers.

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31. In 1913, in Tzarist Russia, about 290,000 persons had received a higher orsecondary education.2. Narodnoe hozjajstvo SSSR v ig6o godu [The Soviet E c o n o my in i960], p. 21, 28,29-36, 33 38, 39-

3. In addition to the general education facilities available, there are also vocational training schoolsand courses of further training for persons already inemployment. Between 1951 and i960 alone, 5,649,000 workers completed637 I N T E R N A T I O N A L S O C I A L S C I E N C E J O U R N A LT A B L E 3. Rate of increase in the n u m b er of specialists with higher a nd secondaryeducation in the U . S . S . R . (1939/59)Total for the U.S.S.R. (in thousands)Hi g h er educationSecondary, general a nd specialized educationC omp l e te secondary(ten years)

Incomplete secondary(seven years)Total (secondary education)Total (secondary a nd highereducation)19391 1772 200124891468915866Number3 7781954435 38654930587081959Percentageincreaseover 1939321888283374370Per thousandof the po19396

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12657783pulation

19591894169263281Number of persons having receivedhigher and secondary educationA m o n g the active populationM a n u al workers (in millions)Intellectual workers (in millions)

Total (active population) (inmillions)A m o n g the rest of the population (in millions)Number of engineers and agronomists(in thousands)EngineersAgronomists a nd zootechnologists3-26.79-96.02472952 8 .418.243-o15-783447777527243526233816243498113

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316884434

A supply of highly qualified specialists is of particular i m p o r t a n ce fore c o n o m ic d e v e l o p m e n t. T h e U . S . S . R . h a s, for a long t ime, b e en the c o u n tryw i th the m o st engineers. At 1 D e c e m b e r i 9 6 0, the Soviet U n i o n h a d m o r et h an 1 , 1 1 5 , 0 00 engineers a n d over 1 , 9 3 0 , 0 00 qualified technicians or m o r et h an 3 million engineering a n d technical specialists. Nevertheless, h a v i ngn o fear of ove r -produc t ion of s u ch specialists, the Soviet educationalsys t em trained 1 2 0 , 0 00 engineers a n d 2 2 0 , 0 00 technologists in i 9 60 a l o n e,a n d this effort is to be intensified in the future. It m a y be n o t ed that, in

the s a me year, the U n i t ed States of A m e r i c a h a d 5 2 5 , 0 00 engineers a n dcourses at vocational a nd technical schools a nd 50.6 million either trained forn e w professions or improved their qualifications by studying individually orin groups, while actually engaged in production.638 E C O N O M I C S O F E D U C A T I O Nthat, over the past few years, the n u m b er of n e w graduates of engineeringschools has been no higher than 38,000 per a n n u m .Literacy campaigns a nd the introduction of compulsory generalprimary education have provided a wide foundation for secondary a ndhigher education. W h e r e a s, in 1940, as m a n y as 62 million of the population(excluding school children) h ad h ad less than seven years' schooling, in 1960the n u m b er had fallen to 38 million. T h us the section of the population witha low standard of education is contracting rapidly while the average level ofeducation is rising quickly. In ten years' time, howeve r, w h e n the elevenyear course of secondaryeducation will be generally available, the levelwill be even higher. O v er 20 million workers in the higher age-groupswith a low standard of education will have retired by that time a nd theirplaces will be taken by m o re than 30 million y o u ng people from secondarya nd higher educational establishments. T h e majority of m a n u al labourers,even, will not only have h ad a sound technical training but also holdsecondary school-leaving certificates. T h e annual n u m b e r of graduatesfrom higher a nd full secondary educational establishments has m o re thandoubled over the past ten years a nd at present (1961) it has already reachedabout 2 million. H a v i ng regard to the rise in population a nd the continuingincrease in the graduation rate, the n u m b er of Soviet intellectual workerswill thus rise to at least 30 million in the next ten years a nd to 70 to 80 millionin the next twenty.In the Western countries, such a high rate of expansion would be liableto result in a heavy over-supply of workers in all the intellectual professions,an increase in u n e m p l o y m e n t, a nd a sharp decline in wa g e s. But in a

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planned e c o n o my there are no such dangers. All Soviet citizens are g u aranteed the right to wo r k. T h ey need fear neither u n e m p l o y m e nt nor a fallin wa g e s. T h e country's current production plans provide, twenty yearsahe ad, for the increase in the productivity of labour, the shortening of theworking d ay whi ch this will necessitate, a nd an increase in nominal wa g e s,

as well as an imp r o v eme nt in the real standard of living of all workers,m a d e possible by the growth of the national income.A s the public education system expands, the State funds allotted toit are systematically increased. F r o m 1932 to i960, the proportion of thebudget assigned to education rose from 10.6 to 14.1 per cent, the actuala m o u nt involved being about twenty-five times as great. Wh e r e as in 1940the appropriations a m o u n t ed to 2,250 million roubles, in i960 they rose to10,300 million roubles (103,000 million old roubles) or approximately11,500 million dollars. A n d , of course, parents p ay nothing for theirchildren's education.In i960, the unit cost of education (in n e w roubles) w as about

3,000 roubles in the case of the full secondary education course (ten years),a nd no m o re than 3,600 roubles for the seven-year course of secondaryeducation followed by training in a technical school, a nd 8,000 roubles forhigher a nd secondary education combined (fifteen years' study in all),including scholarships. It w as naturally lower in the case of the correspon-639 I N T E R N A T I O N A L S O C I A L S C I E N C E J O U R N A Ldence courses provided by technical schools and higher educationalinstitutions. It will be seen that expenditure on education is relatively l ow,a nd the direct economic return from it is thus all the m o re significant.This return is reflected first of all in the increase in workers' w a g e s.In 1924-25, the w a ge level of Soviet workers w as still very low, althoughits real value w as no lower than in pre-revolutionary times w h e n theadditional social insurance payments are taken into account. Later onthe w a ge level rose greatly, with the increase in the productivity of labour,to which the higher standard of education a m o n g the population m a d e agreat contribution.It has already been pointed out that, other things being equal, rudimentary education