Saturday, April 16, 2011

Economics of Education

From Freakonomics Radio:
So of all the topics that economists have studied, I would say one we are most certain about are the returns to education. And the numbers that people have come up with over and over are that every extra year of education that you get will translate into an 8% increase in earnings over your lifetime. So someone who graduated from college will earn about 30% more on average than someone who only graduated from high school. And if anything, the returns to education have gotten larger over time. They’re as big as they have ever been. And I think it makes sense that the returns to education now are higher than they’ve ever been because of how the economy has changed. It used to be that with a low education, you could get a good manufacturing job, lifetime employment. But now with the Chinese competition for instance, almost all the manufacturing jobs are gone, because there are Chinese workers willing to work, who are able to do these jobs at wages that are one-fifth or one-tenth of what an American worker would demand to do it.
Nothing overly surprising. But it does show why education is and will continue to be very important.

1 comment:

  1. I firmly believe that education was and it will be very much important . A university degree helps to steer away intial breakthrough problems and helps the person to jump many steps compare to someone with only school education. My view is based on enmasse on an average and in few instances the opposite maybe true .


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