Economics of education or Education economics deals with the study of economic issues relating to education, including the study of demand for education and the financing and provision of education.
Demand for education:
The leading model of the demand for education is based on human capital theory. Its central idea is that undertaking education is investment for acquiring skills and knowledge (sometimes called cultural capital) which will result in increased earnings and will provide long term benefits. Statistics and studies have revealed that countries with high enrolment and graduation rates have a much higher economic growth rates. Hence, one can say that education helps generate economic growth.
Another model of the demand for education is commonly called screening and is based on the economic theory of signalling. Its central idea is that the successful completion of education is a signal of one’s ability.
Financing and provision:
In most countries school education is more or less financed and provided mainly by governments. Public funding and provision also plays a vital role in higher education.
