HUMAN CAPITAL:
Education and health in Economic
Development
The Central Roles of Education & Health
◦ Education and health are basic objectives of development:
they are important ends in themselves.
◦ Health is central to well being, and education is essential is
essential for a satisfying and rewarding life; both are
fundamental to the broader notion of expanded human
capabilities
The Central Roles of Education & Health
◦ Education plays a key role in the ability of a developing
country to absorb modern technology and to develop the
capacity for self sustaining growth & development
◦ Thus, both health & education can also be seen as vital
components of growth & development
The Central Roles of Education & Health
◦ Very dramatic improvements in world health & education over
past half century
- 1950, some 280 of every 1000 children in the developing world
as a whole died before their fifth birthday.
- 2011 that number had fallen to 95 per 1000 in low income
countries & 46 per 1000 in middle income countries.
Despite of these achievements, the developing world still faces
challenges in improving health and education of its people.
Education & Health as Joint Investment
for Development
◦ These are the investments in the same individual.
◦ Greater health capital may improve the returns to investments
in education
- Health is a factor in school attendance
- Healthier student learn more effectively
- A longer life raises the rate of return to education
- Healthier people have lower depreciation of education
capital
Education & Health as Joint Investment
for Development
◦ Greater education capital may improve the returns to
investments in health
- Public health programs need knowledge learned in school
- Basic hygiene and sanitation may be taught in school
- Education needed in training of health personnel
◦ These two human capital issues are treated together because
of their close relationship.
Improving Health & Education: Why
increasing Incomes Is not Sufficient
◦ Health and Education much higher in high income countries
◦ Causality might runs in both directions
- With higher income, people and governments can afford to
spend more on education and health
- With greater health & education, higher productivity and
income are possible
◦ Development policy needs to focus on all 3 simultaneously.
Improving Health & Education: Why
increasing Incomes Is not Sufficient
◦ Evidence shows that increases in income often do not lead to
substantial increases in investment in children’s education & health.
- Low estimated income elasticity of demand for calories for low
income households
- Policies to increase income of poor w/o focus on how they are
spent may not lead to improved health, successful development
more generally
- Better educated mothers tend to have their children at any income
level.
Improving Health & Education: Why
increasing Incomes Is not Sufficient
◦ Better health status and nutrition affects school performance
- Earlier and longer school enrollment: better school
attendance; more effective learning.
◦ To improve effectiveness of schooling, improve health of
children in developing countries
- Deworming of parasite-infected school children significantly
improved their school attendance and other outcomes.
Investing in Education & Health: The
human Capital Approach
◦ Initial investments in health and education lead to a stream of
higher future income
◦ E.g
- Life Insurance & Investment
- Educational Plan
- Life plan
The Gender Gap: Discrimination in
Education and Health
◦ Young females receive less education than young males in nearly
every low and lower middle income developing country
◦ Closing educational gender gap is important because:
- The social rate of return on women’s education is higher than that of
men in developing countries.
- Education for women increases productivity, lowers fertility
- Educated mothers have a multiplier impact on future generations
- Education can break the vicious cycle of poverty and inadequate
schooling for women
The Gender Gap: Discrimination in
Education and Health
◦ Consequences of gender bias in health and education
- Economic incentives and their cultural setting
* Boys provide future economic benefits; receipts of dowry
upon marriage in rural asia; more educated girls may be
considered “less marriageable”
◦ Increase in family income does not always lead to be better
health and education
Educational Systems & Development
◦ The political Economy of Educational Supply and Demand
◦ The relationship between employment Opportunities &
Educational demand
◦ As employment opportunities diminish (for given level of
education) demand for higher education increases putting
pressure on government to expand educational facilities at
the higher level
Educational Systems & Development
◦ Worsens urban-rural gap; unemployment at all levels of
education
◦ Distribution of Education
- Unequal distribution of education in developing countries
- When quality (teaching, facilities, curricula etc) is considered,
inequality much greater
Educational Systems & Development
◦ Education, Inequality & Poverty
◦ Education inequality reinforces income inequality
◦ Poor students cant enroll in secondary school and university.
◦ Education & Internal Migration
◦ -influences rural-urban migration.
