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Economics 172 Issues in African Economic Development

Explore the impact of education on economic development in Africa, including the Girls Scholarship Program in Kenya and its effects on school performance and test scores.

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Economics 172 Issues in African Economic Development

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  1. Economics 172Issues in African Economic Development Lecture 13 February 28, 2006

  2. Outline: • New topic: Education and economic development • Models of educational investments • The Girls Scholarship Program (GSP) in Kenya Economics 172

  3. Education and economic development • Does education lead to higher income? OR does higher income lead to more educational investment? Economics 172

  4. Education and economic development • Does education lead to higher income? OR does higher income lead to more educational investment? • Unclear macroeconomic evidence on education and growth (e.g., the case of Kenya) Economics 172

  5. Education benefits beyond wages • Women’s education and infant mortality: each additional year of schooling is associated with a 5-10% reduction in under-5 mortality Economics 172

  6. Education benefits beyond wages • Women’s education and infant mortality: each additional year of schooling is associated with a 5-10% reduction in under-5 mortality • Education may improve adoption of new technologies, e.g., in agriculture, health Economics 172

  7. Education benefits beyond wages • Women’s education and infant mortality: each additional year of schooling is associated with a 5-10% reduction in under-5 mortality • Education may improve adoption of new technologies, e.g., in agriculture, health • Educated people may make better citizens in a democracy and be more active in civil society Economics 172

  8. A model of educational investment • Inputs into household utility include current consumption (c1), and future earnings of the two children (one girl, one boy), yg and yb • Their amounts of schooling are xg and xb, respectively Economics 172

  9. A model of educational investment • Inputs into household utility include current consumption (c1), and future earnings of the two children (one girl, one boy), yg and yb • Their amounts of schooling are xg and xb, respectively • Key assumption 1: the marginal return to schooling is assumed to be larger for boys than for girls for all schooling levels: yb(x) > yg(x) for all x Economics 172

  10. A model of educational investment • Inputs into household utility include current consumption (c1), and future earnings of the two children (one girl, one boy), yg and yb • Their amounts of schooling are xg and xb, respectively • Key assumption 1: the marginal return to schooling is assumed to be larger for boys than for girls for all schooling levels: yb(x) > yg(x) for all x • Key assumption 2: there is no old-age saving in the model, other than through investments in children Economics 172

  11. A model of educational investment • Children allocate their time budget T between studying (x) and working. The wage for child labor is w>0 Economics 172

  12. A model of educational investment • Children allocate their time budget T between studying (x) and working. The wage for child labor is w>0 • The maximization problem: Choose xg and xb to maximize U(c1, y) subject to two conditions, c1 = w(T – xg) + w(T – xb) y = yg(xg) + yb(xb) • Equating marginal returns to investment across boys and girls leads the household to invest more in boys Economics 172

  13. Other issues in educational investment • Positive spillovers within classrooms, households and firms to schooling  underinvestment in education Economics 172

  14. Other issues in educational investment • Positive spillovers within classrooms, households and firms to schooling  underinvestment in education • Children may choose to invest too little in schooling even for themselves, due to high discount rates Economics 172

  15. Other issues in educational investment • Positive spillovers within classrooms, households and firms to schooling  underinvestment in education • Children may choose to invest too little in schooling even for themselves, due to high discount rates • Parents may not be fully altruistic towards children Economics 172

  16. The Girls Scholarship Program (GSP) • GSP is a randomized evaluation of a merit award for Grade 6 girls in Busia and Teso districts, Kenya Economics 172

  17. The Girls Scholarship Program (GSP) • GSP is a randomized evaluation of a merit award for Grade 6 girls in Busia and Teso districts, Kenya • 64 Treatment schools, 63 comparison schools • The top 15% of girls in program schools (by district) received a $38 prize, and a public awards ceremony Economics 172

  18. The Girls Scholarship Program (GSP) • GSP is a randomized evaluation of a merit award for Grade 6 girls in Busia and Teso districts, Kenya • 64 Treatment schools, 63 comparison schools • The top 15% of girls in program schools (by district) received a $38 prize, and a public awards ceremony • What impact do these incentives have on test scores and other measures of school performance? Economics 172

  19. The Girls Scholarship Program (GSP) • Treatment and comparison group schools are similar (Table 3, Figure 5) Economics 172

  20. Economics 172

  21. Economics 172

  22. Economics 172

  23. Whiteboard #1 Economics 172

  24. Whiteboard #2 Economics 172

  25. Whiteboard #3 Economics 172

  26. Whiteboard #4 Economics 172

  27. Whiteboard #5 Economics 172

  28. Map of Africa Economics 172

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