Educational investment, rural productivity, and rural-urban migration: some notes

Abstract

The evaluation of benefit streams from educational investments present particular difficulties in countries with, chronically distorted wages in the "formal" urban sector and rapidly changing supply-demand relations for educated labour. Particularly problematic is the gap that opens up between the private and the social payoff to the investments and the conflict over both the quantity and “mix” of different forms and orientations of education in any expansion of the system. The private returns generate the political pressure, but the social returns should presumably be considered in any economic rationale for the investments.

These notes, with the help of a simple migration model, look at some of the issues connected with the estimation of educational benefits, and conclude that it is rural and agricultural pursuits, into which the increments to the educated labour force are going to have to be absorbed (despite whatever they hoped about an urban wage job), that must now be examined with respect to the payoff of educational expansion. This conclusion follows from the requirement that we concern ourselves with the margin (i.e. increment to supply), and with social rather than private returns.

These somewhat random notes were written in response to a last minute request, made in the short hectic period before my departure for a year to analyse a large quantity of data that might shed light on some of the above questions. They undoubtedly bear the stamp of the innumerable interferences and preoccupations that inevitably characterize such a period.