Economics of Education

The economic analysis of education has been an active research area for about four decades, beginning in the early 1960s with important contributions to human capital theory by Gary Becker and others. The course covers some main issues in this research, including the seminal contributions as well as recent contributions from the research frontier. The topics to be covered include: 1. Education and training under perfect competition (optimal schooling decisions, education and self-selection, general and firm-specific training). 2. Education and training in imperfect labor markets (Why do firms train? Externalities and market failures in education and training.) 3. The private returns to education. (Estimation issues. How to control for innate ability and other unobservable variables: ability controls, twin studies and instrumental variables.) 4. Non-pecuniary and intergenerational effects of education. (Effects on fertility, criminality, health and mortality. Effects on children’s health, grades and education.) 5. The social returns to education (external effects of education, education and growth). 6. The economics of school choice (school competition, private vs. public schools, school vouchers: effects on achievement and sorting of pupils). 7. Educational policy and educational production. (How strong is the relationship between resources and outcomes? Do public investments generate equality in outcomes? How important are teachers?) 8. Peer effects in the class room. (Is individual performance affected by class performance? How does segregation affect outcomes?)