ECONOMICS OF EDUCATION

JENLO E. DIAMSE
PhD Student

REBECCA ALLEN :
Economists analyse the production of education in
this world where resources such as the capital
invested in buildings or technology and the labour
of the teacher workforce are necessarily scarce.
This scarcity of resources means that policymakers
must decide:
How much to spend on each stage of education
(i.e. what to produce);
How to provide educational services in a way
that maximises its benefits to society (i.e. how to
produce education); and
Who should have access to each stage of

Every Country development is dependent on two

main factors;
Natural Resource;
Fertile Countryside, Forests, Minerals, Canal &
Rivers etc.
Human Capital
Well Educated, Skillful and Well Trained

Human Capital
an individuals productive capacity.
Human Capital may be increased by investments
in:
Education,
Training (Skill Development), and
Health Care
Individuals with more Human Capital receive
Higher pay (since they are more productive).

Factors influencing Human Capital Investment

Interest Rate (toward Education and training)

The age of the individual,
The costs of education, and
The wage differential between high school and
college graduates.

Economic Benefits of Education

Range of Job Opportunities
Job Security
Taxes paid to state
Averages Earnings

 Increasing Expenditures and the Economy

Human Capital more important than Natural
Resources in wealth creation
High Education development overcomes lack
of natural resources
Poor Education Systemlower individual
economic productivity
Expenditures Benefit Individuals and Society
Social mobility, higher status, increased
appreciation for arts and culture, increased
participation in democratic process
Family, neighborhood, business, society and
culture benefit

mand and Supply of Education

Demand Drives:

Household Income
Cost of Education
Education versus Job
Cultural factors
Government role

Household Income

Cost of Education
CHED approves tuition hike in 116 more schools
(2014)
About 64 schools in Metro Manila will increase their
tuition with an average per unit cost of 6% or
P66.24 ($1.51).
In Central Luzon, 26 schools will increase an
average per unit of 9.3% or P39.42 ($0.90), while
25 schools in Calabarzon will increase with an
average per unit of 7.35% or P51.04 ($1.17).
Ilocos region, Cagayan Valley, and Mimaropa posted
the highest average tuition increases of P37.28 or
$0.85 (12.99%), P39.41 or $0.90 (13.53%), and
P55.60 or $1.27 (13.90%), respectively.
The nationwide average of tuition increase is at

Education versus Job

Cultural factors

Government role

Maintaining coverage skill gaps

Improving the quality of higher education
Increase research relevant to economic needs

Supply Drives:
Labor force
Government funding
Social outlook

Labor force

Top Benefeciaries of 2015 Budget

Education P367.1 billion, up 18.6% from 2014
Public Works and Highways P303.2 billion, up
37.9% from 2014
National Defense P144.5 billion, up 17.3% from
2014
Interior and Local Government P141.4 billion, up
3.8% from 2014
Health P108.2 billion, up 19.2% from 2014
Social Welfare and Development P103.9 billion, up
24.6% from 2014
Agriculture P89.1 billion, up 11.4% from 2014
Transportation and Communications P59.5 billion,
up 21.7% from 2014
Environment and Natural Resources P21.5 billion,
down 10% from 2014

THANK YOU !!!