The Principled Agent

Thoughts on development economics and impact measurement

When Does Schooling Pay?

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Robert Barro and Jong-Wha Lee report:

Results confirm that the rate of return to schooling varies across levels of education. The estimated rate of return is higher at the secondary (10.0%) and tertiary (17.9%) levels than at the primary level, which differs insignificantly from zero. The results imply that, on average, the wage differential between a secondary-school and a primary-school graduate is around 77% and that between a college and a primary-school graduate is around 240%.

The challenge of increasing educational attainment is evident in the numbers: education doesn’t pay at the beginning, and if you are uncertain about the future it might make sense just to work. PROGRESA provided conditional cash transfers to families based on school attendance, changing the economic incentives and positively affecting attendance; the question is whether this increased primary school attendance, in itself, is worth much. More often than we’d like to believe, the decision not to attend school is rational.

At the same time, consider Barro and Lee’s numbers in the context of the current aid environment for education:

The current system where African higher education receives little or no support while universities in the west launch multi-million dollar “Development Research Centres” they don’t need is not only clearly unsustainable, but highly self serving.  It pushes an imperialistic mindset that allows western institutions to serve as command centres for Africa’s economic and political systems without the proper context and it leaches Africa’s best academic minds, leaving young Africans not fortunate enough to afford an expensive international education largely clueless and underesourced with respect to international development issues in their own countries. (Project Diaspora)

Unfortunately, the international community is not particularly interested in building post-secondary capacity in developing economies.  The Millennium Development Goals both reflect and entrench the primacy of primary education. Perhaps demand for primary and secondary education would increase if the 240% wage premium from a college education wasn’t so physically distant?

Why doesn’t NYU’s Development Research Institute  engage in capacity building in the countries it ostensibly studies and assists? If DRI, home to some of the more self-aware development economists, is content to build its towers thousands of miles from its areas of concern, is there any hope for serious academic institutional support of universities in developing economies? Or will the talented people of these developing economies be forced to funnel into the US and Europe (leaving behind those without mentors to guide them through the process)?

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Written by Chris Prottas

June 19, 2010 at 4:50 pm

Posted in Development, Education

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