The Political Economy of Education

As a continuation of the overall introduction to the book, Chapter 2 summarizes the main contributions of economics to understanding the role of education in society and to educational policy. The chapter details these contributions in three parts: (1) economists have demonstrated that education has an important economic dimension (that it has economic value), and they have inserted education policy near the center of the debate on economic development and material well-being; (2) they have formalized concrete models of student learning, both in and out of school, and have developed models of educational production, in which schools, districts, and states are economic decision units, allocating resources to produce educational outputs – and where incentives and resource allocation decisions affect the productivity of teachers and student learning, economists have been able to model a number of strategies that increase output and test them empirically; and (3) economists have also been at the forefront of applying new and increasingly sophisticated statistical techniques to estimate quantitatively the causal effects of various educational policies on student academic outcomes and adult economic and social outcomes.