ERIC Number: ED335389
Record Type: RIE
Publication Date: 1991
Reference Count: N/A
Schooling, Skills, and the Returns to Government Investment in Education: An Exploration Using Data from Ghana. Living Standards Measurement Study, Working Paper No. 76.
Investments in schooling are often regarded as essential for economic development, implying that such investments have high rates of return in developing countries. This paper examines the accuracy and usefulness of estimates of rates of return to formal schooling based on the standard human capital model of G. Becker and J. Mincer. Focus is on whether failure to account for differences in ability and school quality across a random sample significantly biases estimates of the private return to schooling derived from estimates of wage equations. This is done using an unusually rich data set from Ghana (over 4,700 households), which includes tests of ability and cognitive skills administered to 389 survey respondents. When years of schooling are used to measure the accumulation of human capital, there are virtually no returns to schooling in the private sector. Replacement of years of schooling by reading and mathematical ability does show positive returns to acquired skills, although these rates may be of little use to governments making schooling investment decisions because of the complexity of such decisions. Many government investments in education are designed to raise rates of return to schooling by raising school quality, but decisions by individuals assume that both rates of return and school quality are exogenous. Thirteen tables present data from the analyses. Four appendices provide supplemental data concerning the calculation of rates of return. (SLD)
Descriptors: Developing Nations, Economic Impact, Educational Finance, Educational Policy, Educational Quality, Elementary Secondary Education, Equations (Mathematics), Estimation (Mathematics), Federal Aid, Foreign Countries, Government Role, Human Capital, Mathematical Models, Outcomes of Education, Return on Investment
The World Bank, Publications Department, 1818 H St., N.W., Washington, DC 20433 (Order Stock No. 11764, $6.95, Price Code 006).
Publication Type: Reports - Evaluative
Education Level: N/A
Authoring Institution: World Bank, Washington, DC.
Identifiers: Ghana; Human Capital Theory