4. Human capital

Question 1

What are the two most common examples of human capital?

Answer 1

Education and health

Question 1

Define human capital?

Answer 1

Anything that increases the effectiveness of labour. A society’s investment in the productive attributes of a population

Question 2

How do health and education impact development?

Answer 2

They are both an objective and a core input

Question 3

How is human capital often reflected in widely used measurements?

Answer 3

The Human development index and the multidimensional poverty index

Question 4

What are some of the major health advancements in the last 70 years?

Answer 4

• Under 5 mortality rates have fallen from 280 per 1000 in 1950 to 69 and 49 in lower and lower middle income countries respectively
• Rubella and Polio have been largely controlled through vaccines - Smallpox has been eliminated

Question 5

How have literacy rates changed globally?

Answer 5

85% of people in the world are literate today compared to only 63% in 1970

Question 6

What is another key improvement in education globally?

Answer 6

There has been continued improvements in addressing gender discrimination in education

Question 7

What are the benefits of greater health capital on the individual level?

Answer 7

• Higher returns to investments in education
• Health is a factor in school attendance
• Healthier students learn more effectively
• A longer life raises the return to education

Question 8

What are the benefits of greater education capital on the individual level?

Answer 8

• Higher returns to investments in health
• Public health programs need knowledge learned in schools
• Basic hygiene and sanitation may be taught in school
• education is needed in training health personnel

Question 9

Why does health data focus on basic hygiene standards?

Answer 9

Because many people suffer from long-term exposure to things that are killing them such as dirty water but their cause of death may be different not showing them up in the statistics

Question 10

Which paper found positive benefits of health treatment on education?

Answer 10

Miguel and Kremer (2004) paper?

Question 11

What were the findings of the Miguel and Kremer (2004) paper?

Answer 11

They conducted a randomised study on the effect of de-worming drugs in rural Kenyan primary schools, the absenteeism of children in schools receiving the drugs decreased by at least a quarter

Question 12

Which paper found positive benefits of education on health?

Answer 12

Glewwe (1999)

Question 13

What were the findings of the Glewwe (1999) paper?

Answer 13

They found a positive relationship between mother’s education and children’s health and nutrition even when controlling for income. They found that mother’s basic health knowledge was the most important factor for improving child health

Question 14

What are the three possible channels for mother’s education impacting child’s health and nutrition?

Answer 14

• The mother’s direct acquisition of basic health knowledge such as how to treat a fever
• Literacy and numeracy skills enhanced abilities to treat illnesses
• Exposure to modern society via schooling changing mothers attitudes towards traditional methods of treating childrens health

Question 15

How can education lead to better economic growth?

Answer 15

• Education plays a key role in enabling a developing country to absorb modern technology and methods of production
• If earnings differentials are related to productivity differences, then a more educated workforce should be more productive

Question 16

What paper shows that better education leads to higher incomes in Venezuela?

Answer 16

Psacharopolous (1995)

Question 17

Could education be seen as just screening/ signalling and doesn’t actually represent any real improvements to productivity?

Answer 17

A micro-level study by Jones (2001) finds a clear link between education level and productivity among workers in 200 manufacturing firms in Ghana reflecting genuine productivity differentials

Question 18

What is the net private rate of return to education?

Answer 18

The difference between the cost and benefit of obtaining each additional year of education for the individual accounting for the opportunity cost

Question 19

What is the net SOCIAL rate of return to education?

Answer 19

Returns to the individual accounting for the additional costs borne by society from allocating resources to education (eg. building equipment and government subsidies)

Question 20

How is the ‘optimal’ level of education determined and why is it important?

Answer 20

Private returns underpin demand yet social returns dictate the supply of education. The level of education deemed optimal for the individual and society will differ

Question 21

What is the human capital theory?

Answer 21

The view that education and training make workers more productive by developing their skills increasing future productivity

Question 22

Where are social returns maximised with respects to social costs?

Answer 22

Early secondary school

Question 23

How can a high disease burden have an effect at the countrywide level?

Answer 23

It lowers productivity and economic growth.Gallup and Sachs (2000) estimate that GDP per capita in countries with intensive malaria grew 1.3% less than countries without the disease (controlling for confounding variable)

Question 24

What else did Gallup and Sachs (2000) find in their work relating to the impact of malaria ?

Answer 24

Eradication of malaria in a country is also associated with a substantially higher relative growth in the following 5 years

Question 25

How can improved health lead to economic growth?

Answer 25

Early-life nutrition is associated with improved health, academic success and higher productivity and earnings in adulthood

Question 26

What are some common measures of poor childhood health and under nutrition?

Answer 26

• Being underweight - short term exposure to disease or inadequate nutrition
• Stunting - long term exposure to disease or inadequate nutrition

Question 27

Define underweight

Answer 27

Weight for age is 2 standard deviations below the average for a health reference group

Question 28

Define stunting

Answer 28

Height for age 2 standard deviations below the average for a health reference group accounting for ethnic differences

Question 29

Why is early life nutrition important?

Answer 29

Because poor nutrition at an early age has significant inputs on your brain and body and your capacity to learn. Even basic motor nueron function is impacted

Question 30

What can be the impact of social structures on educational provision ?

Answer 30

Young females often recieve less education than young males in nearly every low and lower middle income developing country.

Question 31

Why is it important to close the educational gender gap?

Answer 31

Because the social rate of return to women’s education is higher than that of men

Question 32

Why is there a higher social rate of return to women’s education than men?

Answer 32

• Education for women increases productivity and thereby lowers fertility (increased OC)
• Mothers usually devote a larger fraction of income to child welfare than fathers - future population health and education increases future GDP
• Mothers’ knowledge (even without extra income) reduces child mortality

Question 33

Where is the education gap widest?

Answer 33

Sub-Saharan Africa and South Asia

Question 34

How do social constructs impact healthcare provisions?

Answer 34

In South Asia, studies have shown that when a child becomes sick, families are more likely to attend a health facility if the child is a boy than a girl because of cultural and economic forces

Question 35

How many ‘missing women’ are there estimated to be in Asia?

Answer 35

At least 126 million

Question 36

What is the cause of the missing women in Asia?

Answer 36

Excess female mortality and to a lesser extent, changes in sex-ratios at birth resulting from gender-selective abortion (predominantly in China and India)

Question 37

What type of problems are Conditional cash transfers (CCTs) aimed at solving?

Answer 37

Increases in family income will not always lead directly to improved human capital as there are issues as to where the money should be spent

Question 38

What is a Conditional cash transfer?

Answer 38

A typical CCT provides a cash transfer to poor households conditional on fulfilling a pre-specified set of requirements

Question 39

What are some common pre-specified requirements for households to start to receive CCTs?

Answer 39

• All children must attend regular health check-ups
• All children must be enrolled in school at the appropriate ages and maintain good attendance

Question 40

What is an example of a CCT program?

Answer 40

Bolsa familia in Brazil and Mexico’s Progresa (Oportunidades)

Question 41

What have the effects of the Progresa (oportunidades) program been in Mexico?

Answer 41

• Lower levels of malnutrition
• Increased attendance at health facilities
• Higher school attendance and lower dropout rates
• A lower probabilities of being employed as child labourers

Question 42

Where is the educational gender gap the most prevalent and give some exact figures

Answer 42

The educational gender gap is especially great in the least-developed countries in Africa, where female literacy rates can be less than half that of men in countries such as Niger, Mali, Guinea, and Benin. The gap is also relatively large in South Asia.

Question 43

Show some examples of gender inequalities in school completion rates

Answer 43

School completion is also subject to gender inequalities, and the gap is often particularly large in rural areas. For example, in rural Pakistan, 42% of males complete their primary education, while only 17% of females do so. In the cities, the gender gap is smaller though still substantial, as 64% of males complete primary education versus 50% of females in urban areas

Question 44

Why is closing the gender gap economically desirable?

Answer 44

1.The rate of return on women’s education is higher than that on men’s in most developing countries. [This may partly reflect that, with fewer girls enrolled, the next (marginal) girl to enroll is likely to be more talented on average than the marginal boy.]
2.Increasing women’s education not only increases their productivity (and hence also earnings) in the workplace but also results in greater labour force participation, later marriage, lower fertility, and greatly improved child health and nutrition, thus benefiting the next generation as well.
3.Because women carry a disproportionate burden of poverty, any significant improvements in their role and status via education can have an important impact on breaking the vicious circles of poverty and inadequate schooling.

Question 45

What is one estimate about the economic cost of not educating girls?

Answer 45

One estimate is that the global cost of failing to educate girls is about $92 billion a year