Ch 8: Human Capital: Education and Health in Economic Development

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1. Human capital Productive investments embodied in human persons, in-

cluding skills, abilities, ideals, health, and locations, often
resulting from expenditures on education, on-the-job train-
ing programs, and medical care.

- Basically human capital can be defined by the issues of

education and health

2. Rate of return The rate of return will be higher whenever the discount
rate is lower, the direct and indirect costs are lower, or the
benefits are higher.

3. Rate of return - We see the highest ROR on primary education in devel-

on primary edu- oping countries
cation in devel-
oping countries: - Sub-Saharan Africa sees the highest ROR of 37.6 (out of
all the countries) in primary education. This is reflected by
the income differential between those with more and less
schooling is greater on average than developed countries

4. ROR on sec- - Least high ROR out of the three types of schooling
ondary educa- - 24.6%
tion:

5. ROR on higher - Second highest ROR out of the three

education: - 27.8

6. ROR on educa- The rate of return on women's education is higher than

tion of males vs. that on men's in most developing countries. [ This may
females partly reflect that, with fewer girls enrolled, the next (mar-
ginal) girl to enroll is likely to be more talented on average
than the marginal boy]

7. Social ROR Social costs of education: In developing countries, the

(costs) on educa- opportunity cost to society as a whole resulting from the
tion need to finance costly educational expansion at higher
(benefits of edu- levels when there limited funds might be more productively
cation) used in other sectors of the economy.

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 Ch 8: Human Capital: Education and Health in Economic Development
Study online at https://quizlet.com/_1pitid
- This opportunity cost increases rapidly as students climb
the educational ladder

8. Private ROR The private costs of education (those borne by students

(costs) on educa- themselves) increase more slowly and may even decline
tion
(benefits of edu- Ex: Private benefits of education are those that directly
cation) accrue to a student and his or her family.

9. Educational gen- Male-Female differences in school access and comple-

der gap tion.

- The Educational gender gap is especially great in the

least developed countries in Africa, where female literacy
rates can be less than half that of men in countries such
as Niger, Mali, and Benin.

10. Which region of South Asia

the worlds did
not experience
decrease in the
child mortality
(under age 5)?

11. Which region of - Sub-Saharan Africa

the world has
the largest num-
ber of adults
and children liv-
ing with HIV?

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