Chapter 8

Human Capital: Education and Health in Economic Development

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The Central Roles of Education and Health

Health and education are important objectives of development Health and education are also important components of growth and development

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Education and Health as Joint Investments for Development

Greater health capital may improve the returns to investments in education Greater education capital may improve the returns to investments in health

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Improving Health and Education: Why Increasing Incomes Is Not Sufficient Increases in income often do not lead to substantial increases in investment in childrens education and health

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Investing in Health and Education: The Human Capital Approach

Initial investments in health or education lead to a stream of higher future income The present discounted value of this stream of future income is compared to the costs of the investment Private returns to education are high, and may be higher than social returns
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Financial Trade-Offs in the Decision to Continue in School

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Rates of Return to Investment in Education by Level of Education, Country, Type, and Region

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Child Labor
Child labor is a widespread phenomenon The problem may be modeled using the multiple equilibria approach Government intervention may be called for to move to a better equilibrium

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Child Labor as a Bad Equilibrium

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The Gender Gap: Women and Education

Young females receive less education than young males in nearly every LDC Closing the educational gender gap is important because,
The rate of return on womens education is higher than that of men in developing countries It increases productivity Educated mothers have a multiplier impact on many generations It can break the vicious cycle of poverty
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The Gender Gap: Women and Education

Increase in family income does not always lead to better health and education o Benefits of public investment in health and education o ROI in education and health

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Educational Systems and Development

The relationship between motivated demand and politically responsive supplies in determining how many school places are provided Social versus private benefits and costs of education

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Private versus Social Benefits and Costs of Education: An Illustration

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Educational Systems and Development

Educational supply and demand: the relationship between employment opportunities and educational demands Social versus private benefits and costs Distribution of education Education, inequality, and poverty Education, Internal Migration, and the Brain Drain

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Educational Systems and Development

Educational supply and demand: the relationship between employment opportunities and educational demands Social versus private benefits and costs Distribution of education Education, inequality, and poverty Education, internal migration, and the brain drain
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Health Systems and Development

Health A state of complete physical, mental and social wellbeing and not merely the absence of disease and infirmity (WHO) Disease burden Diarrhea Malaria Malnutrition Measles Parasitic Worms ( waterborne flatworms)

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Health Systems and Development

Health and productivity Performance indicators of health system:
Overall level of health of the population. Health inequalities within the population. Health-system responsiveness.( patient satisfaction) The distribution of responsiveness within the population. The distribution, or fairness, of the health systems financial burden within the population.
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Role of government in health system

Health is critical to poverty alleviation Household spend too little on health Market would invest little in health infrastructure.

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Figure 8.12 Proportion of Children under 5 Who Are Underweight, 1990 and 2005

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Figure 8.15 GNI per Capita and Life Expectancy at Birth, 2002

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