On Benefit—Cost Analysis of Investment in Schooling in Rural Farm Areas

Micha Gisser

American Journal of Agricultural Economics, 1968, vol. 50, issue 3, 621-629

Abstract: The effect of additional schooling on economic productivity of human agents working on farms is estimated. The cost of schooling is measured by estimating the direct cost of schooling and income foregone while attending school. A model of the farm labor market is constructed. Schooling appears as a predetermined variable in the supply and demand functions of the model. The empirical results of fitting cross-sectional data to a reduced equation in which the farm wage rate is a dependent variable are utilized in order to obtain an estimate of the pecuniary benefit of schooling. The benefit—cost ratio of schooling in farm areas is computed to be 2.37. This result suggests that comprehensive rural development in the less-developed countries should strike a balance between investment in schooling and tangible capital.

Date: 1968
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