Economics of Education Part 2.pptx

education is explained as investment on human capital

1. Economics of Education Part 2 Human Capital Theory Monday, June 1, 2020 MED 603 1

2. Human Capital Theory In the past labour was viewed as a static factor of production So when economists were discussing economic progress they were emphasizing on money, capital goods and natural resources Economic development was understood to be dependent on capital inputs only, and the human being was only a consumer of the economic products Now there is a recognition of the importance of training of the labour force to improve productivity Monday, June 1, 2020 MED 603 2

3. Human Capital Theory The beginnings of relatively new interest in the role of human capital dates back to the early 1960s Schultz (1961) put forward the argument that increases in value of total output in relation to increases in existing factors of production could be attributed to investment in human capital He argued that all human beings possess some abilities needed in production It is within this context that human beings constitute what in economic terms is seen as ‘capital’ Monday, June 1, 2020 MED 603 3

4. Human Capital Theory Human capital is the component of the labour force due to the influence of education and training Human capital is the human being who is endowed with knowledge, skills and expertise to be used in various ways, to operate the social and economic system in a given society Various sectors of the economy require varied human skills and abilities Human capital, in the form of the educated and skilled personnel is a pre-requisite for the viability of capital projects Monday, June 1, 2020 MED 603 4

5. Human Capital Theory The recognition of the importance of human capital has led to mass educational development programmes , and the rise of the amount of resources allocated for education It is actually the emphasis placed on ‘capital’ in production that has given rise to the phrase ‘human capital’ Capital is now understood as any form of productive investment, whether physical capital or human capital Monday, June 1, 2020 MED 603 5

6. Similarities Between Physical and Human Capital Both physical and human capital are means of production, in that they are necessary for production of goods and services Both physical and human capital are capable of making returns over the investments made on them over a period of time Monday, June 1, 2020 MED 603 6

7. Differences Between Physical and Human Capital Physical Capital It ultimately goes to extinction It can be sold It is only a usable resource It is required only in some sectors of the economy It is manufactured Human Capital It does not go to extinction even when it becomes outdated, it can be updated by education I t cannot be sold It is usable but also it decides on the use of other resources It is required in all sectors of the economy It is created through investment in education Monday, June 1, 2020 MED 603 7

8. Problems of Human Capital Development Developing countries are experiencing problems in developing the human capital Some of the problems are: The rapidly growing population Growth rate in most cases is above 2% per annum So large part of the population is below working age and therefore non-productive So greater percentage of the national resources are required to invest in their education Pressure on available resources is very high Monday, June 1, 2020 MED 603 8

9. Problems of Human Capital Development Increasing Unemployment The rate of increase in the labour force, exceed the rate of increase in jobs There is a concern for human resource development planner as to what to do with the surplus labor So unemployment is rising Inability to measure the actual contribution of human capital to national development Productivity of labour depends on other factors: natural ability, motivation, initiative, social background etc. Many people with low level of education succeed, and their abilities are not directly acquired through education Monday, June 1, 2020 MED 603 9

10. Problems of Human Capital Incentives How do various sectors of production induce persons to prepare for, and engage in occupations which are important for the national growth Rewards of some categories of personnel and technicians are not sufficient to attract the numbers needed e.g. Remuneration packages of teachers are often inadequate, earnings of engineers and scientists are often inadequate compared to administrative officers in the government and politicians Monday, June 1, 2020 MED 603 10

11. Possible Ways of dealing with the Problems The Rapidly Growing Population There is no ready made solution Stakeholders are the best to decide on how to tackle these issues The mandate to deal with this issue involve many sectors, not only the human resources development planners Increasing Unemployment Consider ways and means of absorbing surplus manpower and direct it to productive activities Through building modern industries and rural transformation Monday, June 1, 2020 MED 603 11

12. Possible Solutions to the Problems Measuring the Actual Contribution of Human Capital to National Development Apply special methods to estimate the contribution Estimate the cost of producing labour force Use this to estimate the expected returns on the investment incurred in educating the relevant proportion of the labour force Incentives Give scholarship support for particular kinds of education Remove barriers to people progressing in their occupation Monday, June 1, 2020 MED 603 12

13. Education and Economic Growth Investment is necessary for national development Education is one of those important investments for economic growth and national development Definition Economic Growth: is the increase in the output in the economy compared to the previous years It is measured by taking the rate of increase of the national income Monday, June 1, 2020 MED 603 13

14. Education and Economic Growth National Income National income is the sum total of all earned and unearned income in the economy Development Development is growth of the economy plus change The implication is that development incorporates both growth in the income of the people as well as change in their social, cultural, political quality of life So development is both a qualitative and a quantitative dimension Monday, June 1, 2020 MED 603 14

15. Education and Economic Growth It is generally believed that education tends to raise the earnings of the educated Therefore investment in education accelerates economic growth It is similarly believed that education, through its various processes is instrumental to any national development Monday, June 1, 2020 MED 603 15

16. How Education Contributes to Economic Growth There are two major ways education contributes to economic growth By improving the literacy level of the labour force By helping in the acquisition of relevant skills and expertise Improving the Literacy Level of the Labour Force Better educated person is likely to do a better job than a less educated one, because additional education is expected to give the educated better ways of doing things Monday, June 1, 2020 MED 603 16

17. How Education Contributes to Economic Growth Acquired literacy helps the individual to: Have positive orientation towards life and its related activities Accept and appreciate changes and innovations which may enhance productivity Improve his health habits, which have implications for his effective contribution to the economy Sick individual can hardly make any meaningful contribution to the economy Generate ideas and information that assist others to improve their performances within the economy Monday, June 1, 2020 MED 603 17

18. How Education Contributes to Economic Growth Education as a Source of acquisition of skills and expertise Political, social and economic skills are taught and developed by educational institutions The level of acquisition of skills varies with the length of time spent in educational institutions Two main ways in which acquisition of skills facilitate economic growth: The educated individual has a better mastery of the tools and techniques required for performing a given job This leads to higher job productivity and job efficiency Monday, June 1, 2020 MED 603 18

19. How Education Contributes to Economic Growth 2. The Management of resources (physical and human) better Many countries have abundance of resources and skilled labour force But may lack the capacity to manage them effectively The acquisition of relevant management skills ensures that both the human and physical resources are in balance through effective planning, organization, controlling, evaluating and coordinating It is only when resources are well utilized that effective productivity in any economy can be envisaged Tanzania needs to improve on this Monday, June 1, 2020 MED 603 19

20. Efficiency of the Educational System Definition Efficiency can be defined as the relationship between inputs and outputs, whereby economic efficiency is increased by a gain in units of output per unit of input If the same output can be produced by using less inputs efficiency has improved Similarly if greater output can be achieved by using the same level of inputs, efficiency has improved In education we can view efficiency by looking at the use of buildings, teachers, class size, time to cover curriculum etc. Monday, June 1, 2020 MED 603 20

21. Efficiency of the Education System Cost per enrolled students is normally different from cost per successful students This is because there are dropouts This makes the cost per successful students to be higher than cost per student enrolled The difference measures the efficiency of the educational system The lower the difference the more efficient the system Monday, June 1, 2020 MED 603 21

22. Problems of measuring efficiency The problem for economists and educators, is how to mix the inputs in the right proportions to achieve the most efficient outcome In addition we ask ourselves what output should we measure? It is difficult to specify a unit of output Because educational systems have no single well defined indicator of output In education some efficiency measures include Cost per full time equivalent student, student teacher ratio and percentage of classroom time utilized Monday, June 1, 2020 MED 603 22

23. Types of Efficiency There are two types of efficiency: internal efficiency and external efficiency Internal Efficiency Internal efficiency is concerned with the relationship between inputs and outputs within the education system or within individual institutions An educational system is said to be internally efficient when it turns out graduates without wasting any student-year, or without dropouts or repeaters Internal efficiency is improved when more education outputs are produced using given or fewer education resources Monday, June 1, 2020 MED 603 23

24. Types of Efficiency External Efficiency External efficiency of an educational system involves the relationships between general and vocational education and between schools and world of work An internally efficient education system may be externally inefficient if the graduates it turns out are not what the society, economy, or the higher levels of education wants The graduates may be wrongly qualified, not meeting the university entrance requirements, not employable or redundant Monday, June 1, 2020 MED 603 24

25. Promotion of External Efficiency To promote external efficiency it may be necessary to estimate the number and skills that will be required in the country at a future date If we succeed to estimate the number and kinds of skills that will be required in the country at a future date and enroll students in programs corresponding to the future requirements, then we are promoting external efficiency Serious efforts have to be made by both curriculum specialists, educational administrators and planners to reduce the level of external inefficiency Monday, June 1, 2020 MED 603 25

26. Wastage In the past section we saw that efficiency in education include the flow of students through the system with minimum wastage and the quality of learning achieved in the system at given levels The concept of wastage cannot be separated from efficiency Definition Education wastage means the inefficient use of educational resources It includes dropouts, repeaters, non employment of school leavers, brain drain, and inadequate utilization of teachers .. Monday, June 1, 2020 MED 603 26

27. Wastage Inadequate utilization of educational resources implies that in a school system, the teachers posted to the school are not properly utilized In this situation it is possible that some teachers do not have classes to teach, or teach very little It is also possible that some buildings are lying idle Monday, June 1, 2020 MED 603 27

28. Causes of Wastage There are three categories of wastage depending on: The nature of educational inputs The nature of processing The nature of output A. Wastage due to the nature of Educational Inputs This type of wastage is due to the nature and ability of students, nature and type of educational resources , the goals of the educational system and the content of curriculum The manifestation is through the number of dropouts within the educational system Monday, June 1, 2020 MED 603 28

29. Causes of Wastage In our case, most of the students drop out because of Poor health and death Truancy Financial difficulties Poverty Learning difficulties among students Parents wish Early pregnancy and marriages Monday, June 1, 2020 MED 603 29

30. Causes of Wastage The nature and types of educational resources also may cause dropouts 1. Lack of teachers and basic facilities for educatio n Primary and secondary schools in the rural areas lack essential facilities The problem of science is due to inadequate resources for science practical training Even the problem of mathematics in most cases is due to the lack of mathematics teachers Monday, June 1, 2020 MED 603 30

31. Causes of Wastage 2. Nature and goals of the educational system may cause wastage I t could be noted that where the goals of the educational system are practical oriented then the products would be gainfully employed on graduation But where goals emphasise literacy and general education the products would be unemployed 3. Nature of the content of the curriculum could cause wastage . Some programs do not have big demand in the job market Monday, June 1, 2020 MED 603 31

32. Causes of Wastage B. Wastage due to the Nature of Processing This has to do with the administrative system, the examination system, or the certificate system The nature of the administration or management of the school system could be faulty The administrator may be autocratic or high-handed The administrator may be laissez faire who allows everything to go its own way without making effort to correct The nature of the examination system may also be faulty Monday, June 1, 2020 MED 603 32

33. Causes of Wastage C. Wastage due to the Nature of Output The graduates from the educational system may not conform to the initial objectives The graduates may find it difficult to fit in the society e.g. somebody who studied in a non-computer literate system may not fit well in a computer literate job market The graduates may not be fully employed The graduates may not have acquired the changes and thoughts desired by the larger society Monday, June 1, 2020 MED 603 33

34. How to Reduce Educational Wastage Addressing Causes of Health Problems: School heads and medical units of schools should monitor students health so as to detect those who are sick and need medical attention Addressing Financial Inability to Pay Fees The Ministry of Education, Voluntary organisations , financial institutions and wealthy individuals should award bursaries and scholarships to students to prevent dropping out because of financial problems Monday, June 1, 2020 MED 603 34

35. How to Reduce Educational Wastage To Address Shortage or Nature of Educational Inputs The quality of teachers should be improved by making sure that they go for periodic training Educational institutions should organize conferences, seminars and workshops for serving teachers to assist them to improve their teaching methods and techniques TIE should make sure that instructional materials are available To Address the Nature of Output More emphasis should be put on science and technology The graduates should acquire behavior and thoughts desired by the society to fit well Monday, June 1, 2020 MED 603 35

36. How to Reduce Educational Wastage To address weaknesses in the Teaching/Learning Processes Appointing authorities should make sure that administrators are qualified and competent Politics should not influence the appointment of educational administrators of educational institutions Educational institutions should lay emphasis on continuous assessment, and discourage the motive of certificate acquisition Monday, June 1, 2020 MED 603 36

37. Effectiveness of Educational System Effectiveness is normally defined in terms of the achievement of objectives An effective school is one in which students progress further than might be expected from consideration of its intake, it adds extra value to its students’ outcomes e.g. A Secondary school is said to have achieved its objectives if its students perform well in the national examination So an activity is performed effectively if it achieves the objective it for which it was planned Monday, June 1, 2020 MED 603 37

38. Effectiveness of Educational System Some scholars argue that effective or ineffective schools are especially effective or ineffective for the underprivileged and the initially low achieving students The implication is that effective schools can overcome powerful impact of social disadvantage The more effective schools tend to improve the attainment of all students, but do not remove overall patterns of the difference related to students backgrounds Monday, June 1, 2020 MED 603 38

39. Effective School Characteristics Effective schools have the following general factors: Productive climate and culture Focus on central learning skills Appropriate monitoring Practice oriented staff development Professional leadership Parental involvement Effective instructional arrangements High expectations Monday, June 1, 2020 MED 603 39

40. Processes of Effective School Processes of Effective Leadership Being firm and purposeful Involving others in the process Exhibiting instructional leadership Frequent personnel monitoring Selecting and replacing staff Processes of Effective Teaching Unity of purpose Consistency of practice Collaboration and collegiality Monday, June 1, 2020 MED 603 40

41. Processes of Effective School Maintaining Focus on Learning Focus on academics Maximising school learning time Producing a Positive School Culture Creating a shared vision Creating an orderly environment Emphasising positive reinforcement Creating High and Appropriate expectations for all For students and for teachers Monday, June 1, 2020 MED 603 41