The Economics of Education: Conceptual Frameworks

Course ID
Ethiopian Economics Association (EEA)
Kebede Tesfaye

Among the factors of production, labour and entrepreneurial ability lend themselves to improvement by education in the widest sense including training. Education makes people more receptive to change and innovation. It also ensures that individuals who are responsible for making major technical, economic and political decisions possess the knowledge, which enables them to avoid potentially dangerous mistakes. Such results follow from the employment of increasingly better-educated and trained personnel in productive undertakings.

The demand for educational services tends to be large with an increase of the population, the increase of economic development itself, and the influence which the supply of educational services eventually exert on the demand for them. On the other hand, three features, namely, time precedence, unity, and complementarity are of particular importance in determining the supply of educational services. In every country, which consciously promotes its own development, expenditure on education and training tends to increase. It is very likely that for some time educational expenditures will tend to increase faster than the gross national income. This can be ascribed both to the growth of demand for skilled labour and to the growth of incomes, which leads to higher investment in education.

In most countries, the number of teachers tends to increase. At the same time, and quite apart from the continual increase of costs on the construction of buildings, expenditure on non-teaching staff, maintenance of premises, health and welfare services for a growing number of students, represent a high and rising percentage of total expenditure for education and training in many countries.

The result is that, especially in countries where the supply of educational services falls short of demand, the rate of increase in expenditure for education and training definitely exceeds the rate of increase in aggregate and per capita real income. This discrepancy in the two rates of increase means that a county’s intention on economic development has to sacrifice other items of public expenditure.

It is possible to predict future demand for every type of school. Forecasts should be based on reliable assumptions as regards both increase in the student population and better conditions for it. They should make provision for improvements in the professional prospects of lower and intermediate academic staff whose performance in teaching and research largely determines the quality of higher education.

To adapt the supply of educational services to demand requires precise information and a thorough knowledge of the main problems existing in all the various types of schools. So long as the supply lags behind current requirements, the problem of choice between various kinds of public investment does not even arise. Even though the results of bringing educational services up to requirements can be ascertained only in the long-run, their instrumental nature and economic consequences give them a priority status among all other public expenditures.

Finally, it is worth noting that the most basic policy issues in educational planning relate to the amount of resources devoted to education, the question of balance between the different levels of education, the content of education, the need to bring education to all, and the phenomenon of the educated unemployed.

Corporate Author: Ethiopian Economic Association/Ethiopian Economic Policy Research Institute
Publisher: Ethiopian Economic Association (EEA)
Primary Descriptors: Economics-Study and teaching-Research
Cataloge Date: 02/27/2013
Broad Subject heading: Economics-Study and teaching
Call Number: 330.963 PRO 2004
Serial Key Title: Proceedings of the First International Conference on the Ethiopian Economy
Publication catagory: International Conference
Content type: EEA Publication
Volume: III
Publication date: 2013-05-27 23:04:00
Forum or Discussion date: 2013-02-27 14:55:41
Place of publication: Addis Ababa, Ethiopia
Type of material: Book
Current frequency: Annualy
Author: Kebede Tesfaye

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