IDEAS home Printed from https://ideas.repec.org/a/bla/coecpo/v25y2007i3p459-482.html
   My bibliography  Save this article

An Analysis Of Education Externalities With Applications To Development In The Deep South

Author

Listed:
  • WALTER W MCMAHON

Abstract

A simplified, medium‐term dynamic model of endogenous growth is used to analyze education externalities. Returns include not only direct effects but also indirect effects from education on growth and development. Indirect effects are externalities because they arise as the result of the education of others and prior generations. The existing growth literature often discounts these, although they are shown to be larger than short‐term effects. Simulations for the U.S. Deep South indicate larger medium‐term net education impacts on growth, infant mortality, longevity, and democratization, so policies do matter. These are reasons why micro rate of return estimates are larger than education effects in growth equations. (JEL I21, O40, O10, H23)

Suggested Citation

  • Walter W Mcmahon, 2007. "An Analysis Of Education Externalities With Applications To Development In The Deep South," Contemporary Economic Policy, Western Economic Association International, vol. 25(3), pages 459-482, July.
    • Handle: RePEc:bla:coecpo:v:25:y:2007:i:3:p:459-482
    DOI: 10.1111/j.1465-7287.2007.00041.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1465-7287.2007.00041.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1465-7287.2007.00041.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Timothy Besley & Anne Case, 2003. "Political Institutions and Policy Choices: Evidence from the United States," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 7-73, March.
    2. John Strauss & Duncan Thomas, 1998. "Health, Nutrition, and Economic Development," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 766-817, June.
    3. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," Journal of Economic Growth, Springer, vol. 9(3), pages 271-303, September.
    4. E. N. Appiah & W. W. McMahon, 2002. "The Social Outcomes of Education and Feedbacks on Growth in Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 38(4), pages 27-68.
    5. Gary S. Becker, 1981. "A Treatise on the Family," NBER Books, National Bureau of Economic Research, Inc, number beck81-1.
    6. Robert J. Barro, 1999. "Determinants of Democracy," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 158-183, December.
    7. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 407-443.
    8. Daron Acemoglu & Simon Johnson & James A. Robinson & Pierre Yared, 2005. "From Education to Democracy?," American Economic Review, American Economic Association, vol. 95(2), pages 44-49, May.
    9. Lance Lochner & Enrico Moretti, 2004. "The Effect of Education on Crime: Evidence from Prison Inmates, Arrests, and Self-Reports," American Economic Review, American Economic Association, vol. 94(1), pages 155-189, March.
    10. Katarina R. I. Keller, 2006. "Investment In Primary, Secondary, And Higher Education And The Effects On Economic Growth," Contemporary Economic Policy, Western Economic Association International, vol. 24(1), pages 18-34, January.
    11. Arias, Omar & McMahon, Walter W., 2001. "Dynamic rates of return to education in the U.S," Economics of Education Review, Elsevier, vol. 20(2), pages 121-138, April.
    12. Robert H. Haveman & Barbara L. Wolfe, 1984. "Schooling and Economic Well-Being: The Role of Nonmarket Effects," Journal of Human Resources, University of Wisconsin Press, vol. 19(3), pages 377-407.
    13. Jamison, Eliot A. & Jamison, Dean T. & Hanushek, Eric A., 2007. "The effects of education quality on income growth and mortality decline," Economics of Education Review, Elsevier, vol. 26(6), pages 771-788, December.
    14. Mcmahon, Walter W., 1991. "Relative returns to human and physical capital in the U.S. and efficient investment strategies," Economics of Education Review, Elsevier, vol. 10(4), pages 283-296, December.
    15. McMahon, Walter W., 2002. "Education and Development: Measuring the Social Benefits," OUP Catalogue, Oxford University Press, number 9780199250721.
    16. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
    17. Ronald Moomaw & J. Mullen & Martin Williams, 2002. "Human and knowledge capital: A contribution to the empirics of state economic growth," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 30(1), pages 48-60, March.
    18. McMahon, Walter W, 1970. "An Economic Analysis of Major Determinants of Expenditures on Public Education," The Review of Economics and Statistics, MIT Press, vol. 52(3), pages 242-252, August.
    19. Saurav Dev Bhatta & José Lobo, 2000. "Human capital and per capita product: A comparison of US states," Papers in Regional Science, Springer;Regional Science Association International, vol. 79(4), pages 393-411.
    20. Robert J. Barro, 2001. "Human Capital and Growth," American Economic Review, American Economic Association, vol. 91(2), pages 12-17, May.
    21. McPherson, Michael S & Schapiro, Morton Owen, 1991. "Does Student Aid Affect College Enrollment? New Evidence on a Persistent Controversy," American Economic Review, American Economic Association, vol. 81(1), pages 309-318, March.
    22. Clague, Christopher & Gleason, Suzanne & Knack, Stephen, 2001. "Determinants of lasting democracy in poor countries," MPRA Paper 28048, University Library of Munich, Germany.
    23. McMahon, Walter W., 1998. "Education and Growth in East Asia," Economics of Education Review, Elsevier, vol. 17(2), pages 159-172, April.
    24. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Konstantinos Angelopoulos & Jim Malley & Apostolis Philippopoulos, 2008. "Welfare implications of public education spending rules," Working Papers 2008_37, Business School - Economics, University of Glasgow.
    2. McMahon, Walter W., 2018. "The total return to higher education: Is there underinvestment for economic growth and development?," The Quarterly Review of Economics and Finance, Elsevier, vol. 70(C), pages 90-111.
    3. Justina Prakapavičiūtė & Renata Korsakienė & Renata Korsakienė, 2016. "The investigation of human capital and investments into human capital: Lithuania in the context of the EU," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 3(4), pages 350-367, June.
    4. Blomquist Glenn C. & Coomes Paul A. & Jepsen Christopher & Koford Brandon C. & Troske Kenneth R., 2014. "Estimating the social value of higher education: willingness to pay for community and technical colleges," Journal of Benefit-Cost Analysis, De Gruyter, vol. 5(1), pages 3-41, January.
    5. Dan S. Rickman & Hongbo Wang & John V. Winters, 2017. "Relative Teacher Salaries And The Decision To Teach," Contemporary Economic Policy, Western Economic Association International, vol. 35(3), pages 542-550, July.
    6. Losina Purnastuti & Ruhul Salim, 2015. "Externalities and the Social Return to Education in Indonesia," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 18(1), pages 53-74.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. McMahon, Walter W., 2018. "The total return to higher education: Is there underinvestment for economic growth and development?," The Quarterly Review of Economics and Finance, Elsevier, vol. 70(C), pages 90-111.
    2. Katarina Keller, 2006. "Education Expansion, Expenditures per Student and the Effects on Growth in Asia," Global Economic Review, Taylor & Francis Journals, vol. 35(1), pages 21-42.
    3. Trofimov, Ivan D. & Baawi, Nurulhana A., 2020. "Human Capital: State of the Field and Ways to Extend the Concept," MPRA Paper 107039, University Library of Munich, Germany.
    4. Katarina R. I. Keller, 2006. "Investment In Primary, Secondary, And Higher Education And The Effects On Economic Growth," Contemporary Economic Policy, Western Economic Association International, vol. 24(1), pages 18-34, January.
    5. Capolupo, Rosa, 2009. "The New Growth Theories and Their Empirics after Twenty Years," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-72.
    6. Eric Hanushek & Ludger Woessmann, 2012. "Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation," Journal of Economic Growth, Springer, vol. 17(4), pages 267-321, December.
    7. Sami Chaabouni & Mounir Ben Mbarek, 2024. "What Will Be the Impact of the COVID-19 Pandemic on the Human Capital and Economic Growth? Evidence from Eurozone," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 2482-2498, March.
    8. Antonio Ciccone & Elias Papaioannou, 2009. "Human Capital, the Structure of Production, and Growth," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 66-82, February.
    9. Uwe Sunde, 2006. "Wirtschaftliche Entwicklung und Demokratie – Ist Demokratie ein Wohlstandsmotor oder ein Wohlstandsprodukt?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(4), pages 471-499, November.
    10. Díaz Serrano, Lluís & Pérez, Jessica Helen, 2013. "Do more educated leaders raise citizens’ education?," Working Papers 2072/220219, Universitat Rovira i Virgili, Department of Economics.
    11. Doris A. Oberdabernig & Stefan Humer & Jesus Crespo Cuaresma, 2018. "Democracy, Geography and Model Uncertainty," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(2), pages 154-185, May.
    12. Altinok, Nadir & Aydemir, Abdurrahman, 2017. "Does one size fit all? The impact of cognitive skills on economic growth," Journal of Macroeconomics, Elsevier, vol. 53(C), pages 176-190.
    13. Derek Headey, 2008. "The Principal Components of Growth in the Less Developed Countries," Kyklos, Wiley Blackwell, vol. 61(4), pages 568-598, November.
    14. Nikos Benos & Nikolaos Mylonidis & Stefania Zotou, 2017. "Estimating production functions for the US states: the role of public and human capital," Empirical Economics, Springer, vol. 52(2), pages 691-721, March.
    15. David K. Evans & Anna Popova, 2016. "What Really Works to Improve Learning in Developing Countries? An Analysis of Divergent Findings in Systematic Reviews," The World Bank Research Observer, World Bank, vol. 31(2), pages 242-270.
    16. Siedler, Thomas, 2007. "Schooling and Citizenship: Evidence from Compulsory Schooling Reforms," IZA Discussion Papers 2573, Institute of Labor Economics (IZA).
    17. Ralph Hippe & Roger Fouquet, 2024. "The Human Capital Transition and the Role of Policy," Springer Books, in: Claude Diebolt & Michael Haupert (ed.), Handbook of Cliometrics, edition 3, pages 411-457, Springer.
    18. Xavier Sala-i-Martin, 2002. "15 Years of New Growth Economics : What Have we Learnt?," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 5(2), pages 5-15, August.
    19. Jim Davies, "undated". "Empirical Evidence on Human Capital Externalities," Working Papers-Department of Finance Canada 2003-11, Department of Finance Canada.
    20. Elizabeth N. Appiah, 2017. "The Effect of Education Expenditure on Per Capita GDP in Developing Countries," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(10), pages 136-144, October.

    More about this item

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:coecpo:v:25:y:2007:i:3:p:459-482. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/weaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.