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Economics 172 Issues in African Economic Development

Economics 172 Issues in African Economic Development

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Economics 172 Issues in African Economic Development

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  1. Economics 172Issues in African Economic Development Lecture 13 February 28, 2006

  2. Outline: • New topic: Education and economic development • Models of educational investments • The Girls Scholarship Program (GSP) in Kenya Economics 172

  3. Education and economic development • Does education lead to higher income? OR does higher income lead to more educational investment? Economics 172

  4. Education and economic development • Does education lead to higher income? OR does higher income lead to more educational investment? • Unclear macroeconomic evidence on education and growth (e.g., the case of Kenya) Economics 172

  5. Education benefits beyond wages • Women’s education and infant mortality: each additional year of schooling is associated with a 5-10% reduction in under-5 mortality Economics 172

  6. Education benefits beyond wages • Women’s education and infant mortality: each additional year of schooling is associated with a 5-10% reduction in under-5 mortality • Education may improve adoption of new technologies, e.g., in agriculture, health Economics 172

  7. Education benefits beyond wages • Women’s education and infant mortality: each additional year of schooling is associated with a 5-10% reduction in under-5 mortality • Education may improve adoption of new technologies, e.g., in agriculture, health • Educated people may make better citizens in a democracy and be more active in civil society Economics 172

  8. A model of educational investment • Inputs into household utility include current consumption (c1), and future earnings of the two children (one girl, one boy), yg and yb • Their amounts of schooling are xg and xb, respectively Economics 172

  9. A model of educational investment • Inputs into household utility include current consumption (c1), and future earnings of the two children (one girl, one boy), yg and yb • Their amounts of schooling are xg and xb, respectively • Key assumption 1: the marginal return to schooling is assumed to be larger for boys than for girls for all schooling levels: yb(x) > yg(x) for all x Economics 172

  10. A model of educational investment • Inputs into household utility include current consumption (c1), and future earnings of the two children (one girl, one boy), yg and yb • Their amounts of schooling are xg and xb, respectively • Key assumption 1: the marginal return to schooling is assumed to be larger for boys than for girls for all schooling levels: yb(x) > yg(x) for all x • Key assumption 2: there is no old-age saving in the model, other than through investments in children Economics 172

  11. A model of educational investment • Children allocate their time budget T between studying (x) and working. The wage for child labor is w>0 Economics 172

  12. A model of educational investment • Children allocate their time budget T between studying (x) and working. The wage for child labor is w>0 • The maximization problem: Choose xg and xb to maximize U(c1, y) subject to two conditions, c1 = w(T – xg) + w(T – xb) y = yg(xg) + yb(xb) • Equating marginal returns to investment across boys and girls leads the household to invest more in boys Economics 172

  13. Other issues in educational investment • Positive spillovers within classrooms, households and firms to schooling  underinvestment in education Economics 172

  14. Other issues in educational investment • Positive spillovers within classrooms, households and firms to schooling  underinvestment in education • Children may choose to invest too little in schooling even for themselves, due to high discount rates Economics 172

  15. Other issues in educational investment • Positive spillovers within classrooms, households and firms to schooling  underinvestment in education • Children may choose to invest too little in schooling even for themselves, due to high discount rates • Parents may not be fully altruistic towards children Economics 172

  16. The Girls Scholarship Program (GSP) • GSP is a randomized evaluation of a merit award for Grade 6 girls in Busia and Teso districts, Kenya Economics 172

  17. The Girls Scholarship Program (GSP) • GSP is a randomized evaluation of a merit award for Grade 6 girls in Busia and Teso districts, Kenya • 64 Treatment schools, 63 comparison schools • The top 15% of girls in program schools (by district) received a $38 prize, and a public awards ceremony Economics 172

  18. The Girls Scholarship Program (GSP) • GSP is a randomized evaluation of a merit award for Grade 6 girls in Busia and Teso districts, Kenya • 64 Treatment schools, 63 comparison schools • The top 15% of girls in program schools (by district) received a $38 prize, and a public awards ceremony • What impact do these incentives have on test scores and other measures of school performance? Economics 172

  19. The Girls Scholarship Program (GSP) • Treatment and comparison group schools are similar (Table 3, Figure 5) Economics 172

  20. Economics 172

  21. Economics 172

  22. Economics 172

  23. Whiteboard #1 Economics 172

  24. Whiteboard #2 Economics 172

  25. Whiteboard #3 Economics 172

  26. Whiteboard #4 Economics 172

  27. Whiteboard #5 Economics 172

  28. Map of Africa Economics 172