ECONOMIC RETURNS TO EDUCATION

Economics is the study of how to allocate scarce resources to many wants

(Clark and Verselt, 1987).
Education is the process of acquiring knowledge, skills, right attitudes and
ability to be able to perform various jobs.
Education plays a significant role in the economy of a nation.
This is why Maicibi (2005) argues that when properly planned and managed,
education can enable a poor backward beggar country pass the iron curtain
to enter the haven horizon and join the rich and upfront cohorts of
countries.
Adam Smith talks of investing and improving human skill in order to
increase productive capacities of the labour force.
There is a positive co-relationship between education and development.
Education contributes in various ways to the development process of a
country.
Education acts as a mechanism to enhance all aspects of development in
the following ways:
1. Education reduces poverty it opens people’s eyes to see the
opportunities. There is mobility of labour geographically, occupationally,
horizontally and vertically and the income improves individuals’
standards of living and are able to sustain them. Educated people have
more employment opportunities than the uneducated. It provides
fundamental knowledge and skills for diversification of opportunities and
exploitation of the scarce resources.
2. Education increases productivity: Education creates more skilled
trained labour force endowed with more skills to boost productivity
competence and efficiency (Schultz, 1960). E.g. educational managers,
manufacturers, engineers, etc. contribute to increased GNP.
3. Education increases Gross Domestic Product (GDP): Education creates
a class of educated and specialized professionals e.g. computer engineers
who earn income which is taxed by the government in form of PAYE,
VAT, etc., thus generating income to the country which is used to expand
other sectors of the economy.
4. Education promotes good health. Educated people are more informed
of proper health facilities, better nutrition and balanced diet and seek
proper medical care. E.g. pre-natal and postnatal services. Since
prevention is better than cure, this saves the government a lot of money
for buying drugs which can be used in other sectors that are in dire need
of finances, such as agriculture. There is likely to be low mortality rates
and high morbidity levels to the educated ones. They understand the
need to use mosquito nets, well ventilated toilets, clean water, etc.
5. Education leads to agricultural development. Considerable evidence
indicates that education raises the productivity of farmers. Research
studies carried out in Korea, Thailand, Nepal and Malaysia demonstrates
that education increases the physical productivity of farmers and that
the effects of education on crop yields and other physical measures of
output are positively and statistically and quantitatively important
(Jamison and Lau, 1982).
An educated farmer is able to produce higher yields since he understands
the need of using new farming methods and technology, fertilizer
application and the right proportions, erosion control, use of proper
seeds, avoiding dangerous chemicals, etc.
6. Education helps in environmental conservation. An educated person
will manage and utilize the environment properly, avoiding pollution of
dangerous chemicals, understand the importance of planting trees, has
the knowledge of preserving and conserving the environment and keeping
it clean.
7. Education helps in political development. A country is able to produce
democratic people, who are literate and who know their right to vote and
elect visionary and development conscious leaders.
8. Education inculcates a sense of patriotism. Political leaders and
systems of a country depend on the level of education of her people.
Quality decisions can as well be made by educated policy makers.
9. Education promotes proper use of leisure. Uneducated people do not
acknowledge the importance of proper use of leisure and recreation,
which is meant to produce a healthy nation and productive work force.
Leisure in addition enhances social interaction, full utilization of talents
and abilities, and the mind is refreshed, thus enabling workers to be
more creative and relaxed. Leisure industry also generates income to the
country e.g. tourism.
10. Education enables social participation. Socialization skills are
enhanced through schooling. Conflicts in a family are solved amicably.
There will be reduced rates of petty crimes which will have impact on
prison upkeep. In addition there will be active participation in community
development programs.
11. Education helps in population control. The girl who spends a lot of
time in school will marry late and this reduces the fertility levels.
Similarly she will be able to determine the size of her family since she
knows the importance of using birth control methods, i.e. family
planning. An educated girl is likely to be a career woman and therefore
will have few children to avoid work and leave hassles.