ECONOMICS RESEARCH Insert Student Number Here Essay Example
- Category:Macro & Microeconomics
- Document type:Research Paper
A well-read populace is indispensable for economic as well as social progression. Hence societies, if truth be told, are curios in making sure children along with adults have access to a high quality level of educational openings. The backdrop of Australian higher education is at present enduring a considerable reformation. Higher education is fundamental to realizing the Government’s visualization of a stronger and fairer Australia.
That education is a type of investment is nowadays a deep-rooted and widely-accepted thought. Like other investments it is normal to put whether or not the payback from education is worth the outlay. Below, the paper examines the undergraduate degree attainment rates in Australia followed by a model capturing the private as well as social returns of education along with the associated costs. Finally, it is imperative to consider key latest principal arguments as regards the issue of the benefits and who should bear the costs of education.
Overview of Undergraduate Degree Attainment Rates in Australia
In 2009, the Federal Government launched a policy action aimed at attaining a nationwide goal of 40 percent attainment of bachelor degree qualifications or above among the Australian inhabitants aged 25 to 34 years by the year 2025 (Australian Government, 2009).
The realization of this goal will generate just about 217,000 extra graduates by 2025. The recent attainment pace for bachelor degrees for 25 to 34 year olds stands at approximately 32 percent. According to the OECD (2012), graduation rates from tertiary-level education exceed 50 percent in Australia, Denmark, Iceland, Poland and the United Kingdom, although this is partially lifted up by high rates of international students in these countries apart from Iceland.
Productive citizens (15-64 years) with bachelor degrees and above went up from 17 percentage points in 2010 to 25 percentage points in 2012. Over 18 percent of those aged 15 to 64 years reported of having a bachelor degree as their highest level of education attainment. Individuals with a postgraduate degree as their highest level of education attainment went up from 283, 900 in 2001 to 754,800 in 2012. On gender basis, 27 percent of females aged 15 to 64 years more than males (24 percent) had acquired a bachelor degree or superior qualification as at 2012 (ABS, 2012).
Relevant Economic Model
According to Access Economics (2008), education augments a person’s knowledge latent, and fabricates counter effects right through the economy via a string of constructive externalities.
Express outcomes of education like better individual wages tag along the supposition that education ends in knowledge that boosts an employee’s yield. If employees are compensated the worth of their marginal product, then highly learned employees are supposed to take home better salaries. However, how can this be calculated?
A perfect quantification of a person’s schooling must incarcerate a number of components, counting the number of years spent in school, the value of the teaching, the nature of the set of courses, along with the student’s sweat. Crafting a model that correctly captures all these components is easier said than done. An individual’s years of education are the lone openly observable feature. Other aspects may well be quantified in some way such as educational quality and personal ability and exertion via fitting standardized tests.
In macroeconomic studies, economists regularly incorporate a variable for human capital. However, it is really hard to openly quantify human capital given that it includes various attributes such as education, health, and work experience. Since worker’s schooling is a principal constituent of an economy’s human capital, standard years of schooling within the labor force may well serve up as a factor of an approximation of an economy’s human capital. In this the rate of change of per capita Gross Domestic Product is considered. Bringing aggregate data to play to scrutinize the connection between education and growth in a macroeconomic structure, the effects of human capital externalities that have an effect on growth can be captured effectively. These externalities though not clear in individual approximation of the wage equation; in the aggregate, their net effect possibly will be extra evident.
Finding out the impact of human capital externalities on growth provoked Heckman and Klenow’s latest approximation of the macro-Mincer wage equation. The equation combines transversely individuals annually by using each variable to try to establish the effect of human capital externalities on per-capita Gross Domestic Product growth. The following equation denotes a simplified version of the macro-Mincer wage equation:
The log of the geometric annual mean wage
Annual mean worker education
Since nearly all economies to a large extent support financially human capital investments, the intention of Heckman and Klenow’s use of the macro-Mincer equation is to find out whether economies’ human capital outlay resolutions are efficient.
Critical Analysis of the Key Arguments
Norton (2012), states that on the whole students ought to shell out more for higher education, given how
much they profit from a degree.
They end up landing very lucrative jobs, above average compensation and prominence. In addition, they enjoy appealing courses and take pleasure in student life. He continues to state that given these large benefits, and with the Higher Education Loans Programme, a student loan plan in operation, most government funding are for courses that students would take at any rate. For that reason, the government ought to solitary pay tuition subsidies in exceptional situations where they predispose to public benefits that would not otherwise be produced.
On the other hand, a regular argument supporting tuition subsidies is that higher education benefits the general public variously. Degree graduates forfeit above average taxes that go to fund programs as well as services for each and every one Australian. Other public benefits include elevated volunteering rates, supplementary civil conduct, and better cultural reception. However, Norton (2012) argues that in nearly all cases the public would get in these benefits. In any case, graduates are such gigantic winners that individuals would go to school even with no financial assistance. Moreover, equality concerns do not give good reason for tuition subsidies. With the Higher Education Loans Programme in operation, tuition fees apparently do not discourage people from lower socioeconomic sets from higher education. Public funds possibly will be better used up than in subsidising their education.
The Department for Industry, Innovation, Climate Change, Science Research and Tertiary Education (2011) argues that the intention of offering base funding from the government is to guarantee that public universities along with other qualified
higher education institutions have adequate funds to uphold the value of course deliverance
as set from the Australian higher education structure. Through base funding to universities, the
Government ought to pretender enough finances for universities to convey first-rate schooling programs
that are linked to research and to continue the base competence in doing research plus suitably
funded amenities. Also, even though private benefits differ significantly in accordance with the course, there are as well considerable public benefits from higher education that validate a rolling public involvement to base funding. Besides, Chapman & Lounkaew (2011), state that the fundamental matter is that if governments hope to lay down charges according to the economic presumption these charges must be based upon the contact connecting course expenses and the projected value of the public benefits of higher education.
Present values of higher education public benefits for four year degrees
0.25 Contribution from Human Capital
0.40 Contribution from Human Capital
Total four-year degree
Per year of higher education
Note: Calculations presuppose a 10 percent downward ability alteration
Source: Chapman & Lounkaew, 2011
Australian higher education is at present enduring a considerable reformation with recent developments of who should bear the education expenses alongside associated private and public benefits. In light of this, the Australian government aims
to attain a nationwide goal of 40 percent attainment of bachelor degree qualifications or above among the Australian populace aged 25 to 34 years by the year 2025. Given that nearly all economies of the world considerably support higher education, the use of the macro-Mincer equation would play a great role to find out whether economies’ human capital investment is efficient. Although, Norton (2012) states that individuals should bear the education costs given the associated private benefits, there is great government will to offer tuition subsidies in light of the unavoidable projected public benefits.
Access Economics, (2008), Future demand for a higher education, Department of Education, Employment and Workplace Relations, retrieved from <www.deewr.gov.au/HigherEducation/Review/Documents/AccessEconomics.rtf>
Chapman, B. and Lounkaew, K., (2011), Higher Education Base Funding Review: the value of externalities for Australian higher education, commissioned research for the Higher Education Base Funding Review. Unpublished manuscript. Retrieved from <http://www.innovation.gov.au/highereducation/Policy/BaseFundingReview/Documents/PublicbenefitsofHEreport.pdf>
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