Optimal Education Policy Research Articles

A Critical Analysis of Students' Performance within the 3-Year and 4-Year Secondary Education Policies in Ghana

In its quest for an optimal education system, Ghana has implemented a number of education reform policies ending with the 3-year and 4-year secondary education systems. The main focus of this study was to use research findings to determine which system, between the 3-year and 4-year secondary education policies, is optimal for Ghana. In the methodology, comparative analysis of secondary quantitative data in the form of test scores from the database of the West African Examinations Council was undertaken. The test scores were for the four core subjects, namely, English Language, Mathematics (Core), Integrated Science and Social Studies, for the period 2011 to 2015 within which the two policies operated equally. The difference in performance was subjected to Independent Sample T-test for statistical significance at p≤.05. The Cohen's d effect size of the difference was also considered. Government subsidies for the two systems were examined. The study found that the 4-year secondary education system offers a better chance for academic performance, but the 3-year system is economically more viable. Based on the findings, a 6-year primary, 2-year junior high and 4-year senior high (6+2+4) pre-tertiary education system was proposed for the consideration of policymakers, without abolishing the 2-year kindergarten. A new framework for educational policy evaluation, is proposed. The author believes that the findings will contribute immensely to the search for an optimal secondary education policy for Ghana.

Optimal education policy and human capital accumulation in the context of brain drain

AbstractThis paper revisits the question of how brain drain affects the optimal education policy of a developing economy. Our framework of analysis highlights the complementarity between public spending on education and students' efforts to acquire human capital in response to career opportunities at home and abroad. Given this complementarity, we find that brain drain has conflicting effects on the optimal provision of public education. A positive response is called for when the international earning differential with destination countries is large, and when the emigration rate is relatively low. In contrast with the findings in the existing literature, our numerical experiments show that these required conditions are in fact present in a large number of developing countries; they are equivalent to those under which an increase in emigration induces a net brain gain. As a further contribution, we study the interaction between the optimal immigration policy of the host country and education policy of the source country in a game-theoretic framework.

Beneficial Brain Drain and Non-Migrants' Welfare

Though a net brain gain has tended to be seen as a benefit and referred to as a 'beneficial brain drain' in the literature, its welfare impact for source country residents – or non-migrants – is at best ambiguous. Increased educational investment in response to a brain drain is equivalent to a bet where migrants (M) win and where the impact on residents (R) – whose well-being is a concern for the government – is ambiguous or negative. I compare residents' welfare a) for an open vs. a closed economy, b) under the presence or absence of education externality, c) with vs. without government intervention, and d) with government's concern equal for R and M (R = M) or greater for R (R > M). Main findings are: i) residents lose under an open economy in four of the five scenarios considered, with an ambiguous result under an externality and no intervention; ii) optimal education policy has a positive or ambiguous impact on residents' welfare (and a positive impact under a closed economy); and iii) welfare is higher under intervention when R > M than when R = M. It is worth noting that, though the standard developing country policy of subsidizing higher education is optimal under an education externality in the case of a closed economy, this result need not hold under an open economy.

Optimal Education Policy and Human Capital Accumulation in the Context of Brain Drain

This paper revisits the question of how brain drain affects the optimal education policy of a developing economy. Our framework of analysis highlights the complementarity between public spending on education and students' efforts to acquire human capital in response to career opportunities at home and abroad. Given this complementarity, we find that brain drain has conflicting effects on the optimal provision of public education. A positive response is called for when the international earning differential with destination countries is large, and when the emigration rate is relatively low. In contrast with the findings in the existing literature, our numerical experiments show that these required conditions are in fact present in a large number of developing countries; they are equivalent to those under which an increase in emigration induces a net brain gain. As a further contribution, we study the interaction between the optimal immigration policy of the host country and education policy of the source country in a game-theoretic framework.

On the optimal provision of social insurance: Progressive taxation versus education subsidies in general equilibrium

In this paper we compute the optimal tax and education policy transition in an economy where progressive taxes provide social insurance against idiosyncratic wage risk, but distort the education decision of households. Optimally chosen tertiary education subsidies mitigate these distortions. We highlight the quantitative importance of general equilibrium feedback effects from policies to relative wages of skilled and unskilled workers: subsidizing higher education increases the share of workers with a college degree thereby reducing the college wage premium which has important redistributive benefits. We also argue that a full characterization of the transition path is crucial for policy evaluation. We find that optimal education policies are always characterized by generous tuition subsidies, but the optimal degree of income tax progressivity depends crucially on whether transitional costs of policies are explicitly taken into account and how strongly the college premium responds to policy changes in general equilibrium.

On the Optimal Provision of Social Insurance

In this paper we compute the optimal tax and education policy transition in an economy where progressive taxes provide social insurance against idiosyncratic wage risk, but distort the education decision of households. Optimally chosen tertiary education subsidies mitigate these distortions. We highlight the quantitative importance of general equilibrium feedback effects from policies to relative wages of skilled and unskilled workers: subsidizing higher education increases the share of workers with a college degree thereby reducing the college wage premium which has important redistributive benefits. We also argue that a full characterization of the transition path is crucial for policy evaluation. We find that optimal education policies are always characterized by generous tuition subsidies, but the optimal degree of income tax progressivity depends crucially on whether transitional costs of policies are explicitly taken into account and how strongly the college premium responds to policy changes in general equilibrium.

Quality of Education and the Number of Students: A General-Equilibrium Analysis

For a closed economy, we analyze the relation between the quality of higher education and the number of students. Within a two-period general-equilibrium model, we derive the optimal education policy – i.e., quality of and access restrictions to higher education – with observable ability, and contrast this with a setting where ability is unobservable and financial instruments are restricted to either taxes or fees. If the number of students increases with quality, then there are too many students with tax financing and the quality level is too low – and vice versa with fee financing. Results are not clear-cut when higher quality leads to a lower number of students.

Simulations of Technology-induced and Crisis-led Stochastic and Chaotic Fluctuations in Higher Education Processes: A Model and a Case Study for Performance and Expected Employment

AbstractThis paper presents a simple model of the provision of higher educational services that considers and exemplifies nonlinear, stochastic, and potentially chaotic processes. I use the methods of system dynamics to simulate these processes in the context of a particular sociologically interesting case, namely that of the Turkish higher education sector during the recent global economic crisis. I undertake simulations for two variables, namely for the quality-adjusted performance and the technology-induced expected employment. Simulations for the quality-adjusted performance display stochastic fluctuations around a modestly rising deterministic trend. Chaotic performance trajectories are shown to be possible for certain parameter values; however, given the historical experience and observed current tendencies in higher education in Turkey, they appear to be highly unlikely. Simulations for expected employment indicate that increases in the levels of technology utilization in education could lead to improved perceptions of employment prospects and potentially help to increase the level of employment in the economy.Keywords: Stochastic simulation * Chaotic patterns * Education * TurkeyJEL codes: I21 * I23(ProQuest: ... denotes formulae omitted.)Education has a number of complexity-generating, interrelated features that present considerable challenges to the orthodox economic theory. First, it creates, for individuals in particular and society in general, positive dynamic externalities that are too enormous to ignore and too difficult to measure and internalize. In the presence of such externalities, underproduction of output or services is a likely intertemporal outcome, leading to inefficiency at the societal level. Second, education creates interdependencies for the strategically interacting agents that make atomistically optimizing behavior problematic, producing a wide range of possibilities for cooperation and competition with complicated patterns of stability and optimality. Third, it involves a wide range of nonlinearities that are prone to potentially chaotic behavior. A small change in the initial conditions could produce significant differences in outcomes over time. Fourth, it has, in part, certain indeterminate, stochastic, and/or fundamentally uncertain dimensions that render the educational outcomes open-ended and only partially predictable.There are a number of works in the literature that explore the selected dimensions of these complexities. Among these are Barlas, Diker, and Polat (1997); Barlas and Diker (2000); Hazlett (2000); De Fraja (2002); Marginson (2007); Kara (2007; 2013); Viaene and Zilcha (2009); Loomis and Rodrigues (2009); Eckwert and Zilcha (2012); Budge, Beale, and Lynas (2013); Velasco (2014); Aasen, Proitz, and Sandberg (2014); Schumacher, Dias, and Tebaldi (2014); and Kuziemko (2014).The topics covered by these works range from the dynamic and strategic issues in education to the design of optimal education policies. Needless to say, each work was certainly limited in scope and focused a particular aspect of education. Barlas and Diker (2000) focused, for instance, on the longterm, dynamic, strategic management problems, such as growing student/faculty ratios, poor teaching quality, and low research productivity (p. 331). The analysis they present could be considerably enriched by a proper account of positive externalities associated with education. Such externalities are indicated in Hazlett (2000). The creation of such education-induced spillover benefits has a lot to do with the public and private investment in education, the public and private organization of education, and creative designs of optimal educational policies, which are explored, however partially, in many works including De Fraja (2000), Marginson (2007) and Eckwert and Zilcha (2012).Within this general stream of research education, there are many saddle issues that are delicately dealt with. …

An economic analysis of instructional language

This paper constructs a simple two-tier education framework to analyze the effectiveness of multiple language instruction. Suppose that the government attempts to maximize the average post-education productivity. It is shown that the optimal education policy requires different languages of instruction be adopted in the education system. The impacts of the total budget and the program effectiveness on the optimal budget allocation are characterized.

Optimal education policies under endogenous borrowing constraints

This paper studies optimal education policies under endogenous borrowing constraints in a standard life-cycle model. In a closed economy, a policy that appropriately bundles an education subsidy with an old-age pension can restore the complete market allocation. Such a policy also removes persistent indeterminacies and endogenous fluctuations that exist in its absence. In a small open economy, a similar policy may restore the complete market allocation for a wide range of parameters, a range much wider than previously believed. These results broaden the rationale for a two-armed welfare state (education and pension) to a large class of economies.

Optimal redistributive tax and education policies in general equilibrium

This paper studies optimal linear and non-linear income taxes and education subsidies in two-type models with endogenous human capital formation, endogenous labor supply, and endogenous wage rates. Assuming constant human capital elasticities, human capital investment should be efficient under optimal linear policies, whether general equilibrium effects are present or not. Hence, education subsidies should not be used for distributional reasons. Due to general equilibrium effects, optimal linear income taxes may even become negative. Optimal non-linear policies exploit general equilibrium effects for redistribution. The high-skilled type optimally has a negative marginal income tax rate and a positive marginal education subsidy. The low-skilled type optimally faces a positive marginal income tax rate and a marginal tax on education. Simulations demonstrate that general equilibrium effects have only a modest effect on optimal non-linear policies.

Optimal nonlinear taxation of income and education expenditures

Previous studies that examine the simultaneous setting of income taxation and education policy have overwhelmingly concluded that optimal education policy should be regressive. In this paper, we depart from the existing literature by studying a dynamic model in which the government may choose to impose nonlinear taxes (or subsidies) on both labour income and education expenditures. Our main result is that optimal education policy in our model is progressive. Specifically, if the government can commit to its future tax policy, it is optimal for high-skill individuals to face a zero marginal tax rate on their education expenditures, while that for low-skill individuals is negative. If the government cannot commit, the optimal marginal tax rate on education expenditures by high-skill individuals is positive, while that for low-skill individuals remains negative. Optimal education policy is therefore more progressive when the government cannot commit.

OPTIMAL EDUCATION POLICIES AND COMPARATIVE ADVANTAGE

We consider the optimal education policies of a small economy whose government has a limited budget. Initially, the economy is closed and the government chooses its education policy to maximize welfare under autarky. When the economy trades with the rest of the world the government chooses a new education policy that maximizes welfare under trade. Is it ever optimal for the government to choose its new policy so that it reverses the economy's comparative advantage? We find that if the budget stays fixed when it is optimal to ‘move up the skills chain’ it is not feasible. In such a case, a foreign loan is welfare improving. A move in the opposite direction can be optimal, and when it is optimal it is also feasible.

OPTIMAL EDUCATION IN AN AGE-STRUCTURED MODEL UNDER CHANGING LABOR DEMAND AND SUPPLY

We introduce a model of the optimal education policy at the macro level, allowing for heterogeneity of the workforce with respect to its age and qualification skills. Within this framework we study the optimal education rate in the context of changes in labor demand (as represented by the elasticity of substitution across ages and qualification) and labor supply (as represented by a change in the population growth rates). Applying an age-structured optimal-control model, we derive features of the optimal age-specific education rate. Our results show that the relation between the elasticities of substitution of labor across ages plays a crucial role in the way the demographic changes affect (both in the short and in the long run) the optimal educational policy. We also show that under imperfect substitutability across age and qualification groups, the optimal educational policy is adjusted in advance to any change in the labor supply.

Tuition Fees and the Dual Income Tax: The Optimality of the Nordic Income Tax System Reconsidered

Abstract We examine the optimal tax and education policy in the case of a dual income tax. Incorporating an educational sector and endogenous capital taxation, we show that the results in Nielsen and Sørensen’s study are vulnerable with respect to assumptions on the elasticity of unskilled labor supply. Tax progressivity results residually, whereas educational policy guarantees an optimal tax wedge on, but not necessarily efficiency in, educational investment. The less elastic are the unobservable educational investment and skilled labor (the latter relative to unskilled labor supply), and the more educational policy cares about the skilled labor supply, the more progressive the tax system will be. Education will be subsidized on a net basis if the complementarity effect on the skilled labor supply is strong and important; however, there is also an offsetting substitutability effect of the unskilled labor supply at play.

Optimal public education policy in a two sector model

Proposing a simple two sector model with occupational choice, this paper analyzes the relationship between optimal public education policy and industrial structure. Workers are employed based on their skills and education policy influences the distribution of human capital. Thus, the industrial structure determines whether an elite education policy or an egalitarian education policy is desirable. In particular, this paper indicates how the productivities of each sector and market sizes affect optimal public education policy.

The Design of Optimal Education Policies When Individuals Differ in Inherited Wealth and Ability

In this paper I consider the role of optimal education policies in redistribution when individuals differ in two aspects: ability and inherited wealth. I discuss the extent to which the rules that emerge in unidimensional settings apply also in the bidimensional setting considered in this paper. The main conclusion is that, subject to some qualifications, the same type of rules that determine optimal education policies when only ability heterogeneity is considered apply to the case where both parameters of heterogeneity are considered. This rules imply a widening of the education gap between high- and low-ability individuals in second-best with respect to the first-best gap. The qualifications regard the implementation of the optimal allocation of resources to education and not on the way the optimal allocation in first- and in second-best differ.

Optimal policy and the risk properties of human capital reconsidered

This paper considers how optimal education and tax policy depends on the risk properties of human capital. A key feature of human capital investments is whether they increase or decrease wage risk. In a benchmark model it is shown that this feature alone determines whether a constrained optimal allocation should be characterized by a positive or a negative education premium. In the same model a positive intertemporal wedge is optimal. The robustness of these results is explored in two generalizations: nonobservability of education and nonobservability of consumption. Finally, policies that implement the constrained efficient allocations are considered.

Education and Taxation Policies in the Presence of Countervailing Incentives

I examine income taxation and education policy when the government cannot observe individual productivity, and there exist conflicting incentives for individuals to understate and overstate their productivity. In this setting I identify four possible equilibria, and discuss the corresponding taxation/education policy mix. I show that no general restrictions on optimal taxation and education policy emerge in this environment, but each equilibrium and corresponding policy package can be associated with a country on the basis of its relative income and preference for redistribution.

Optimal Education Policies and Comparative Advantage

We consider the optimal education policies of a small economy whose government has a limited budget. Initially, the economy is closed and the government chooses its education policy to maximize welfare under autarky. Then the economy trades with the rest of the world. Lastly, the government chooses a new education policy that maximizes welfare under trade. Is it ever optimal for the government to choose its new policy so that it reverses the economy’s comparative advantage? We find that if the budget stays fixed when it is optimal to ‘move up the skills chain’ it is not feasible. In such a case a foreign loan is welfare improving. A move in the opposite direction can be optimal and when it is optimal it is also feasible.