Optimal Educational Investment Program in an Economic Planning Model

Abstract

This paper illustrates a possible way in which the planning of education may be brought within the field of general economic planning. It will not deal with all aspects and types of education: its focus is on the working age groups facing the real choice between going to school and to work. Both the young and old age-cohorts, having no such choice, will be left out. Furthermore, the education given is considered purely and simply as a capital good: its cultural, social, political, and other utilities, important as they are, cannot be discussed. This omission may be made good by, say, treating universal primary education, not dealt with in the model, as consumption education politically determined and enforced by the state. As an investment good, education competes with other needs for scarce resources, in the of trained manpower needed for further production and consumption. The problem is-what proportion of national product should be expended on education and what proportion of the working age population should be trained, such as to maximize social utility (U).1 The latter is a function of the level of (C) which society enjoys at any