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Public Education – Why?

Public Education – Why?

In our days, many people often question why the State should intervene in the economy, asking legitimately why the government can, or even may use their own money. One of the areas in which this discussion arises is Education. The debate goes over in two ways, first in order to justify the intervention of the State in Education, and secondly it is centered on the way that the State may intervene. In this small essay I will try to synthesize the main arguments which stand for the entry of public moneys in this subject. But I will remain outside from the debate, in what respects if this interference may be direct, or by applying vouchers, or some other policy.

Then looking to the goals and reasons for government intervention in Education, either by school vouchers, either by offering public education, the main reason which stays behind this, it is the fact that Education is clearly a very powerful positive externality, since it is a subject in which the social marginal benefit highly surpasses the private marginal benefit. This stands because education increases the productivity of the individual in the future, and this fact will conduct to an increase in the wage and in the welfare of that same individual, but it will also represent for all the society a greater contribute, which can be seen in two ways, first as a consequence of the higher production capacity, and second an indirect consequence, related to the fact that, earning higher wages will represent for the Public finances a greater contribution from taxes, then it is possible that a present increase in education spend can represent in the future a surplus for the State, as a consequence of the increase in earnings from wage taxes.

We can distinguish three main reasons for government intervention in education, first we can say that there is a market failure, which is a problem that causes the market economy to deliver an outcome which does not maximize efficiency, in this particular case, since as it was said, it is a negative externality. The second one is related with redistribution, because market distribution may not be the social desired. And finally, Education makes citizens more informed and this is a very important fact in a democracy, because the democratic system highly depends on the education of its citizens.

There is data supporting these conclusions, for example we know that among adults lacking a high school degree, the unemployment rate is 15.2% in the U.S.A, compared to 10.5% for adults with a high school degree. Dropouts also face lower wages when they do nab jobs, making an average of about $10,000 less than high school graduates annually, according to the 2008 numbers from the a CATO Institute U.S. Census Bureau.

Then in my opinion the stance it is not in the fact if the State must or must not finance the Education system, the key point is how the State must do that, if by directly providing the good, or by using school vouchers. And that is other debate!

António Capela




Author: studentnovasbe

Master student in Nova Sbe

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