(Mis-)Understanding Education Externalities

Normann Mueller

MPRA Paper from University Library of Munich, Germany

Abstract: This article reviews the current state of research on education externalities. It finds that much of the confusion regarding their magnitude results from conceptual misunderstandings about their nature. The concepts of 'education', 'teaching', and 'knowledge' need to be distinguished for a better understanding. Whereas pure teaching yields externalities on the primary and secondary level, only the generation of knowledge may produce the spillovers which are typically linked to the tertiary level. The accumulation of education itself does not have such an effect. Education is argued to be a private good with well defined property rights. Individuals may exploit those and provide the production sector with the efficient amount of human capital. Following this rationale, it is demonstrated that empirical studies, contrasting estimates of private and social returns to education, are unsuitable to substantiate the existence of externalities. As a consequence, subsidies to tertiary programs are called into question.

Keywords: Public education finance; Education expenditures; Human capital externalities; Property rights; Endogenous economic growth; Private and social return to education (search for similar items in EconPapers)
JEL-codes: D62 H23 H5 I22 I28 O11 (search for similar items in EconPapers)
Date: 2007-11
New Economics Papers: this item is included in nep-edu, nep-hrm and nep-knm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: (Mis-)Understanding Education Externalities (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:6307

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