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More Economists Suggesting Greater Investment in Education

By Justin Bathon

My daily reading brought me across another interesting article today related to education and economics. In George Will's Washington Post Editorial today, he has a profile of the young economist Austan Goolsbee who is both an economics professor at the University of Chicago and an advisor to the Sen. Barack Obama campaign for President. Other than being an interesting article about a young economist with a very bright future, it is relevant to this blog because of this:

In 1980, people with college degrees made on average 30 percent more than those with only high school diplomas. That disparity has widened to 70 percent. In the same year, the average earnings of people with advanced degrees were 50 percent more than those with only high school diplomas; today, it is more than 100 percent.

The market is shouting "Stay in school!" and Goolsbee's conservative colleagues at Chicago say a high tax rate on high earners is "a tax on going to college." Conservatives say: Don't tax something unless you are willing to have less of it. But Goolsbee says: Conservatives often exaggerate the behavioral response to increased tax rates. The solution is to invest more in education, which will raise wages, reduce inequality and move toward equilibrium. The GI Bill was, he says, so prolific in stimulating investment in "human capital" -- particularly, college education -- that for a while the return on it went down relative to high school.

This is the second influential economist in less than a month to laud the economic benefits of education, as you will remember Fed. Chair Ben Bernanke did so not long ago. While the simple statement that "education is a good investment" is repeated time and again, these types of recent statements by Goolsbee and Bernanke signal the possibility of a shifting view toward national and state investment in education as a long term profitable enterprise for government. How such a shift in economic views toward education's economic benefit on society will affect education in the short or long term is unclear, but given the relative importance of such economists on the fiscal allocations of this country ... it cannot hurt.

Full post as published by Edjurist on October 04, 2007 (boomark / email).