Chapter 88.1 The Central Roles of Education and HealthEducation and Health as Joint Investments for DevelopmentImproving Health and Education: Why Increasing Incomes Is Not Sufficient8.2 Investing in Education and Health: The Human Capital ApproachFigure 8.1 Age-Earnings Profiles by Level of Education: VenezuelaFigure 8.2 Financial Trade-Offs in the Decision to Continue in SchoolTable 8.1 Sample Rates of Return to Investment in Education by Level of Education, Country, Type, and Region8.3 Child LaborAssumptions of the Child Labor Multiple Equilibria ModelFigure 8.3 Child Labor as a Bad EquilibriumOther approaches to child labor policy8.4 The Gender Gap: Discrimination in Education and HealthFigure 8.4 Youth Literacy Rate, 20088.4 The Gender Gap: Discrimination in Education and Health (cont’d)Figure 8.5 Female-Male Ratios in Total Population in Selected Communities8.5 Educational Systems and DevelopmentFigure 8.6 Private versus Social Benefits and Costs of Education: An IllustrationSlide 19Figure 8.7 Lorenz Curves for Education in India and South KoreaFigure 8.8 Gini Coefficients for Education in 85 Countries8.5 Educational Systems and Development (cont’d)8.6 Health Measurement and DistributionFigure 8.9 Life Expectancy in Various World RegionsFigure 8.10 Under-5 Mortality Rates in Various World RegionsFigure 8.11 Deaths of Children under Age 5Figure 8.12A Children’s Likelihood to Die in Selected CountriesFigure 8.12B Proportion of Under-Five Children Who Are Underweight, by Household Wealth, around 20088.7 Disease BurdenFigure 8.13 Proportion of Children under 5 Who Are Underweight, 1990 and 2005Table 8.2 Regional HIV and AIDS Statistics, 2009Table 8.3 The Major Neglected Tropical Diseases, Ranked by Prevalence8.8 Health, Productivity, and PolicyFigure 8.14 Wages, Education, and Height of Males in Brazil and the United StatesFigure 8.15 GNI Per Capita and Life Expectancy at Birth, 2002Concepts for ReviewConcepts for Review (cont’d)Copyright © 2012 Pearson Addison-Wesley. All rights reserved.Chapter 8Human Capital: Education and Health in Economic DevelopmentCopyright © 2012 Pearson Addison-Wesley. All rights reserved. 8-28.1 The Central Roles of Education and Health•Health and education are important objectives of development, as reflected in Amartya Sen’s capability approach, and in the core values of economic development•Health and education are also important components of growth and development – inputs in the aggregate production functionCopyright © 2012 Pearson Addison-Wesley. All rights reserved. 8-3Education and Health as Joint Investments for Development•These are investments in the same individual•Greater health capital may improve the returns to investments in education–Health is a factor in school attendance–Healthier students learn more effectively–A longer life raises the rate of return to education–Healthier people have lower depreciation of education capital•Greater education capital may improve the returns to investments in health–Public health programs need knowledge learned in school–Basic hygiene and sanitation may be taught in school–Education needed in training of health personnelCopyright © 2012 Pearson Addison-Wesley. All rights reserved. 8-4Improving Health and Education: Why Increasing Incomes Is Not Sufficient•Increases in income often do not lead to substantial increases in investment in children’s education and health•But better educated mothers tend to have healthier children at any income level•Significant market failures in education and health require policy actionCopyright © 2012 Pearson Addison-Wesley. All rights reserved. 8-58.2 Investing in Education and Health: The Human Capital Approach•Initial investments in health or education lead to a stream of higher future income•The present discounted value of this stream of future income is compared to the costs of the investment•Private returns to education are high, and may be higher than social returns, especially at higher educational levelsCopyright © 2012 Pearson Addison-Wesley. All rights reserved. 8-6Figure 8.1 Age-Earnings Profiles by Level of Education: VenezuelaCopyright © 2012 Pearson Addison-Wesley. All rights reserved. 8-7Figure 8.2 Financial Trade-Offs in the Decision to Continue in SchoolCopyright © 2012 Pearson Addison-Wesley. All rights reserved. 8-8Table 8.1 Sample Rates of Return to Investment in Education by Level of Education, Country, Type, and RegionCopyright © 2012 Pearson Addison-Wesley. All rights reserved. 8-98.3 Child Labor•Child labor is a widespread phenomenon•The problem may be modeled using the “multiple equilibria” approach•Government intervention may be called for to move to a ‘better’ equilibrium•Sometimes this shift can be self-enforcing, so active intervention is only needed at firstCopyright © 2012 Pearson Addison-Wesley. All rights reserved. 8-10Assumptions of the Child Labor Multiple Equilibria Model•Luxury Axiom: A household with sufficiently high income would not send its children to work•Substitution Axiom: Adult and child labor are substitutes (perfect substitutes in this model), in which the quantity of output by a child is a given fraction of that of an adult: QC = γQA, 0 < γ < 1.Copyright © 2012 Pearson Addison-Wesley. All rights reserved. 8-11Figure 8.3 Child Labor as a Bad EquilibriumCopyright © 2012 Pearson Addison-Wesley. All rights reserved. 8-12Other approaches to child labor policy•Get more children into school (as in Millennium Development Goals), e.g. new village schools; and enrollment incentives for parents such as in Progresa/ Oportunidades•Consider child labor an expression of poverty, so emphasize ending poverty generally (a traditional World Bank approach, now modified)•If child labor is inevitable in the short run, regulate it to prevent abuse and provide support services for working children (UNICEF approach)•Ban child labor; or if impossible, ban child labor in its most abusive forms (ILO strategy; “Worst Forms of Child Labor Convention”)•Activist approach: trade sanctions. Concerns: could backfire when children shift to informal sector; and if modern sector growth slowsCopyright © 2012 Pearson Addison-Wesley. All rights reserved. 8-138.4 The Gender Gap: Discrimination in Education and Health•Young females receive less education than young males in nearly every low and lower-middle