Economics of Education. (Program Report)
Hoxby, Caroline M., NBER Reporter
The NBER's Economics of Education Program has just celebrated its first anniversary, having started officially in September 2001. However, the program was created to recognize the large and rapidly growing body of economic research on education. It was felt that education, as a topic, needed a home of its own, partly to encourage progress and partly to encourage rigor. Progress happens faster when economists researching the same topic talk to one another, instead of each presenting research to his own field audience. Education topics force researchers to draw upon several economic fields, so rigor is enhanced when public economists ensure that their fellow researchers get the public economics right, macroeconomists ensure that the macroeconomics is right, and so on. Members of The Economics of Education Program are drawn from labor economics, public economics, macroeconomics and growth, industrial organization and contracts, development economics, and urban economics. Every field makes its special contributio n. For instance, macroeconomics emphasizes the intergenerational consequences of education investment; development economists offer up evaluations of striking policy experiments that would be too daring for most developed countries. The necessarily brief coverage of a program report lends itself to describing empirical work, rather than theoretical work. However, many of the important contributions to the Program have been made by theorists, whose Working Papers and presentations have been crucial to moving the economics of education forward.
In its first year, the Economics of Education Program held two program meetings and two conferences. Members wrote 60-some Working Papers on education. In addition, program members interested in higher education attended two Higher Education Working Group meetings, organized by Charles T. Clotfelter. The program has thus far spawned two volumes: The Economics of School Choice (ESC), which will be published in early 2003 by University of Chicago Press; and College Decisions: New Economic Research on Higher Education (CD), which will be published about a year later. Although most program members are drawn from economics or similar departments, some are economists at graduate schools of education who help the program stay in touch with that world of research. The conferences have included policymakers and administrators, as well as program members.
What is the operating environment of the Economics of Education Program? Recent years have seen a host of policy developments for economists of education to master, and these will be described later. However, the most important development is probably not a policy one, but the now-almost-ubiquitous realization that U.S. comparative advantage and economic growth are highly dependent on skill-intensive industries [9071, 8337, 7288, 68813. Americans, from "men on the street" to legislators, have concluded that the economic future depends on the supply of skilled workers, and this realization has given urgency to education reform. There is, of course, a correspondingly urgent need for education research.
With so much research going on, this report must be far more selective than I would like. Rather than attempting to discuss all the work, I focus on some recent policy changes that are driving research and a few themes that appear and reappear in Program members' work.
K-12 Policy Developments that have been Stimulating Research
Several policy developments in elementary and secondary ("K-12") education are stimulating research. The most obvious is the school choice movement, which naturally draws economists because it raises interesting questions about incentives, market structure, public financing, housing choice, and intergenerational investments in human capital. The recent Supreme Court decision in Zelman versus Simmons-Harris (the Ohio voucher case) is sure to provide a fillip to research, as it will unleash a new wave of reforms. …