Page 71 - Education for Development:George Psacharopoulos University of Illinois at Urbana-Champaign, USA
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Education for Development: What Policies?c7





                   outcomes documenting high returns to investment in education, especially at the

                   basic level. As a result of such finding, the World Bank in the 1990s changed
                   dramatically its lending portfolio towards basic education. In the last ten
                   years or so, the significance of education for development has been reinforced

                   following the documentation of a series non-market effects of education such as
                   better health, less crime and better civics.
                       The higher the level of educational attainment of a person the more likely

                   for that person to participate in the labor market. The education effect in this
                   respect is particularly strong for women (OECD, 2009). As evidenced in many
                   countries, the higher the level of a person’s educational level the lower the
                   probability that the person would be unemployed (OECD, 2014).

                       Before blaming the educational system, i.e. the supply side, that is not
                   producing the right number and types of graduates to be employable in the

                   market, one should look at the demand side. High unemployment could be due
                   to a structural or institutional factor. Excessive labor market inflexibility by
                   means of a minimum wage, labor hiring-and-firing laws and the non-wage cost
                   of labor, deter employers from hiring, especially the young.

                       It is a universal fact with no exceptions that, on average, better-educated
                   persons earn more than the less educated. The education earnings premium is

                   especially high in developing countries.

                   Education returns


                       The higher earnings of graduates were obtained at a cost, equal to their
                   foregone earnings while studying and the resources needed to operate schools

                   and universities.
                       Two types of returns are usually estimated, each answering a different
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