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15.1 In Defense of a Cost-Benefit Approach to the Economics of Education 15.1 In Defense of a Cost-Benefit Approach to the Economics of Education
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15.2 Two Important Distinctions 15.2 Two Important Distinctions
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15.3 Returns to Education in Full Employment Economies 15.3 Returns to Education in Full Employment Economies
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15.4 Private Returns and the Demand for Education in Labor Surplus Economies 15.4 Private Returns and the Demand for Education in Labor Surplus Economies
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15.5 Social Returns to Education in Labor Surplus Economies 15.5 Social Returns to Education in Labor Surplus Economies
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15.6 An Example of the Measurement of Rates of Return to Education in Labor Surplus Economies 15.6 An Example of the Measurement of Rates of Return to Education in Labor Surplus Economies
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15.7 Conclusion 15.7 Conclusion
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15 Private and Social Returns to Education in Labor Surplus Economies
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Published:December 2018
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Abstract
The purpose of this chapter is to consider the cost-benefit criterion for resource allocation in labour surplus economies calling particular attention to the contrasts with full employment economies. The specific plan is as follows. Section 1 reviews the debate over the applicability of cost-benefit analysis to problems of investment in education. Section 2 draws two important distinctions which are not always clear to educational planners and enumerates the likely benefits, both private and social, from education. Section 3 considers the case of full employment economies. Section 4 looks at the private returns to education in labour surplus economies in relation to the demand for education. Section 5 considers the social costs and benefits in labour surplus economies. Section 6 raises the problems of measuring marginal social rates of return and demonstrates the inadequacy of wage differentials as a measure of marginal social benefit. Section 7 summarizes the main points.
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