Education as a fundamental factor of economic growth – extension (3)

The dominant model of the demand for education is based on human capital theory.

Undertaking education is investment in the acquisition of skills and knowledge which will increase earnings, or provide long-term benefits such as an appreciation of literature (sometimes referred to as cultural capital). The central idea of the approach. [Daniele Checchi, 2006. The Economics of Education: NYUMBANI Human Capital, Family Background and Inequality, Cambridge. ISBN 0-521-79310-6 ISBN 978-0-521-79310-0 Description.]

An increase in human capital can follow technological progress as knowledgeable employees are in demand due to the need for their skills, whether it be in understanding the production process or in operating machines.

Studies from 1958 attempted to calculate the returns from additional schooling (the percent increase in income acquired through an additional year of schooling). Later results attempted to allow for different returns across persons or by level of education. [David Card "returns to schooling," The New Palgrave Dictionary of Economics , 2nd Edition. Abstract.]

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