An Economic Interpretation of the Private Demand for Education

Abstract

The purpose of this article is to explore some of relationships between educational planning and manpower planning.' It is frequently argued that expansion of educational system should be based on detailed forecasts of educated manpower that will be required in a growing economy. My emphasis is somewhat different: it is that manpower forecasts in a developed country like Great Britain must take account of likely expansion of education. The basic argument will involve four variables: demand and supply in the and demand and supply in labour All of these are policy-variables, in sense that they are subject to a measure of control by public authorities. But only one of them, supply in market, is a policy-variable pure and simple, and some of them-demand in labour market is an example-can only be influenced by State to a limited degree. It is precisely this which creates problems for both educational planning and manpower planning. Let us begin by considering so-called education market. The decision to stay at school beyond minimum school-leaving age is a voluntary decision and, therefore, one would think that quantity of extra demanded could be regarded as a functional relationship between willingness to purchase educational services and price of education. This is not way matter is usually treated in literature. Nevertheless, it might be illuminating to follow this traditional line of thought-traditional with economists, that is-to its logical conclusion. If we think of extra beyond statutory age as just another consumer good, its price is simply cost of remaining at school, made up of certain out-of-pocket costs for fees and books plus indirect costs of earnings foregone while studying. It appears, however, that very few parents and even fewer students regard as just another consumer good: social surveys of attitudes of British and American parents and students reveal a keen awareness of vocational oDDortunities oDened uD by additional education.2 In