A-A* (AO3/4) - The Externalities of Education
Economics: Edexcel A A Level, topic 2.1.4
Positive Externalities in Education
The private returns and social returns in education diverge. There are many positive externalities:
1. Social cohesion & cultural values
- Everyone in a society learning to get along with one another, mixing at school and having a shared knowledge base should have a positive impact on cohesion in a society.
2. Crime reduction
- Crime reduces other people's welfare.
- Moretti's (2001) research found that people with higher levels of education were more likely to vote and less likely to be involved in crime.
3. Economic growth
- Economic growth involves using the same inputs to create more or higher quality outputs. This should benefit everyone. In the UK, someone with a median income probably lives better than the Queen 100 years ago.
- Krueger & Lindahl (2001) find that people receiving better education is associated with faster economic growth.
- Barro & Sala-i-Martin (1995) completed statistical analysis that found that a 1% rise in spending on education as a % of GDP led to a 0.15% increase in economic growth.
Test yourself on A-A* (AO3/4) - The Externalities of Education
Name the 3 arguments previously given as positive externalities from education?