SANEI: Education Research Initiative

SANEI has launched the Education Research Initiative – a new programme to stimulate education policy research in South Asia, under a grant from the GDN. The Education Research Initiative of the GDN is premised on the universally recognised proposition that the educational development of a country is critical for poverty reduction, economic growth, and better governance and citizenship. South Asian governments have long understood this, yet the public resources in the aggregate devoted to education have not been commensurate with the recognised importance of education for development. Further there have been significant variations among countries of the region, as well as among sub-national units within countries, with respect to education policy, public resources devoted to education and in educational outcomes. Increasing amount of data on various aspects of the censuses, household surveys and administrative agencies have become available over time.

SANEI announced a Call for Proposals in this area. It invited research proposals that make use of the available data to throw light on relevant aspects of the economics of education from the perspective of improving educational policy making in the region. 6 projects were selected for funding out of a total of 20 proposals which were received in this area. The table below lists the approved projects.

Research Areas/Needs

At a basic level one needs to understand what the education sector is supplying in the way of services, the private and social costs of producing these educational services, the private and social value of those services as embodied in better educated persons, and the factors determining whether a family or independent individual privately demands particular educational services produced by the educational system. The following are illustrative of research needs for creating such an understanding.

	Assembling Available Information Research is needed to assemble information in a consistent and economically coherent form that would describe how a country uses private and public resources to improve the education of its citizens.
	Production Function for Education The production of educational services can be viewed as a production function, with inputs systematically creating outputs of value. But the variations in the cross section or over time in school input use is undoubtedly related to unobserved factors that affect the schooling process, and consequently direct estimation of educational production function obtained by relating outputs to observed inputs in the cross section or over time will yield biased and inconsistent estimates of the underlying educational production function. Work is therefore needed to interpret input and outputs of the educational system drawn from special situations (e.g. social experiments or quasi-experiments induced by exogenous shocks) where these educational production functions can then be identified and estimated without bias. This generally suggests a goal to analyse data from settings where the inputs to the educational process are varied independently of other characteristics of the schools or student population, and consequently not affected by or interacting with the myriad of unobserved characteristics of the school or the students.
	Accounting of Costs of Education A thorough accounting of the costs of education includes public sector expenditures on education by policy relevant categories, as adjusted for subsidies and taxes. To the public resource costs should be added the private opportunity costs of the time of student and direct private costs of attending school. This cost accounting will therefore build on both government accounts and representative surveys of households, from which the private costs of attending school can be estimated.
	Estimating Private Returns Education Investment in education yields private returns both in terms of higher wages in wage employment of and higher productivity of work in self-employment for the educated. In quantifying the former, one should start with studies of wage structures derived from representative surveys of the labor force that control, at a minimum, for sex and age of the worker. The researcher should also study the factors, which affect which individuals in the population hold a wage job, including of course education. Combining research on who is a wage earner, and what wage earners receive in higher wages for their schooling, a statistical basis can be constructed for inferring how large the private labor market returns are likely to be for improved education in each (relatively closed) national labor market. In quantifying the latter, any available data on productivity on family farms and firms as well as household production activities could be analyzed. An important question on which there is not much research is in understanding how education increases productivity, and under what circumstances education yields larger and smaller returns to private families and to society. Is technological change and dynamic disequilibrium necessary to gain larger returns from schooling, or does learning from doing a job simply accrue faster for more educated workers? Is a major part of education’s contribution to worker productivity due to its effect on the health of the worker, or on his interregional mobility, or to other allied human capital investment processes?
	Investment in Higher Education South Asian countries are alleged to have devoted a disproportionate share of their public educational expenditures to higher education. India for example, has invested in Institutes of Technology and Management. Private and public resources, particulars in individual states, have been used in setting up and operating engineering and medical colleges, polytechnics (including in recent years, schools for training computer software professionals). What have been the private and public returns to this investment in South Asia? Has it merely resulted in brain drain from South Asia in a globalizing environment, as has been alleged, or do the remittances from emigrants, besides accruing as income to their households in South Asia, in part constitute social returns in some well defined sense?
	Externalities of Education Benefits and possible costs of education that are not captured by the student or her family are called social externalities of education. Education is alleged to be associated with decreased morbidity due to communicable diseases, which may thus benefit neighbours, by reduced exposure to infection. It has also been suggested that higher the education and skill levels of labour relative to their remunerations, the greater is the potential for attracting foreign direct investment (FDI), which in turn is claimed to generate positive externalities to the host country. As FDI inflows have become quantitatively more important than external aid flows for countries such as India, these externalities, of present, may have implications for educational policy. Although, potentially important, there are relatively few studies to confirm the mechanisms generating such externalities and others or their actual magnitude. Research, which could quantify these externalities of education by school level and gender, could prove influential for policy makers.

APPROVED PROJECTS

Education Research Initiative Workshop

India Habitat Centre, New Delhi

November 17, 2003