Educating Girls, Educated Women

Abstract

After a half-century of failed top-down international aid efforts that ignore basic microeconomics, the New Development Economics (NDE) offers an alternative. First, sound institutions (such as rule of law, property rights, contractual enforcement, etc.); second, respect for basic microeconomic principles (from incentives to knowledge). Within the New Development Economics, development economist William Easterly offers controversial and innovative insights; one of these is the ineffectiveness of education - alone, and without sound institutions - for promoting growth. We argue that Easterly is generally correct, but we improve on Easterly's lessons by dehomogenizing education. Specifically, education for girls has high marginal returns: at the micro level, even a slight increase in education dramatically improves the health of girls - and their daughters - in a virtuous cycle. At the macro level, educated women have a significant marginal impact on growth and institutional improvement. We complement a theoretical approach with a case study that demonstrates the importance and marginal impact of educating girls - even if sounds institutions are not yet present.