Labor Economics: Theory, Institutions, and Public Policy

By Ray Marshall; Vernon M. Briggs Jr. | Go to book overview
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CHAPTER 9
The Economics of Education and Training: Empirical Evidence

EMPIRICAL EVIDENCE

The preceding chapter presented the theoretical arguments over the relationship between education, productivity, and income. Before presenting our own conclusions on this controversy, it is useful to look at the mounting empirical evidence from scholars who have analyzed this issue.

On the positive side, a number of attempts have been made to avoid the problems created by confusing years of schooling with educational attainment. Studies that measure the relationship between basic educational skills or competitiveness regardless of years of schooling have found strong positive relationships with various economic and social indexes. For example, Berlin and Sum have compiled evidence that individuals with basic skills do better in school work, have higher self-esteem, and are more likely to complete additional years of school, obtain a high school diploma, go on to college, complete college, work more hours, earn higher wages, enter into marriage, and be more productive workers. At the same time, those without good basic skills "will more likely be school dropouts, teenage parents, welfare dependent, or criminally involved."1

Just as an individual's income and quality of life improve with added investment in human capital, so too, many have argued, human resource development has a major influence on the income and quality of life of the entire society. Logically, human resource development is important to economic performance and competitiveness in an internationalized information world because all the keys to competitiveness in such a world -- productivity, efficiency, quality, flexibility, and innovation -- depend on well-educated, well-trained people. Countries with limited physical resources, like Germany and Japan, have enjoyed superior economic performance because they have been forced to develop their human resources. Indeed, Pacific Rim countries like Korea, Taiwan, and Singapore have given very high priority to education and human

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1
Gordon Berlin and Andrew Sum, "American Standards of Living, Family Welfare and the Basic Skills Crisis," Speech delivered at a Conference of School and Employment and Training Officials, sponsored by the National Governors Association and the Chief State School Officers, December 1986, p. 2.

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